ZipRecruiter is a Return to Normal Play
Online job recruiter ZipRecruiter (NYSE: ZIP) stock is benefiting from the labor shortage amidst rising employment and wage inflation.
Online job recruiter ZipRecruiter (NYSE: ZIP) stock is benefiting from the labor shortage amidst rising employment and wage inflation. The tight labor market is a boon to business as the return to normal means companies are on hiring binges. However, the rising wage pressures and the limited talent pool is squeezing organizations to be more efficient in their search. ZipRecruiter utilizes artificial intelligence (AI) engines to find the best matches. It’s worth noting that almost 20% of the working population tends to job hop yearly, which becomes more active in a tightening labor market as workers seek better pay and benefits. The hiring boom is anticipated to continue as the reopening continues with the acceleration of COVID vaccinations. ZipRecruiter went public on May 26, 2021, through a direct listing on the New York Stock Exchange. Shares were priced with meat on the bones enabling it to rise from a low of $19.32 into the mid $20s as it continues to trade above it’s the opening price, which is more of a rare event with current IPOs. Remote work and digital migration have helped the Company become a pandemic winner, but the return to normal hiring boom makes it a key post-pandemic play for risk-tolerant investors looking for exposure on opportunistic pullbacks.
Since its launch in 2010, ZipRecruiter has serviced nearly three million businesses with 100 million candidates as a premiere online job search platform. ZipRecruiter’s business model is simple. They play a matchmaker or a market maker that connects companies with workers and vice versa. They are almost like the “original” Uber (NYSE: UBER) of employment playing the spreads. The Company claims that 80% of employers receive a qualified employee candidate within 24 hours of posting a job. While many companies are in the online recruitment business, ZipRecruiter is unique as in the Company is actually profitable. Revenues rose to $125.4 million in Q1 2021, up from $113.3 million in the year-ago same quarter. Net income was $13.4 million versus a net loss of ($11.1 million) in Q1 2020. The model is efficient and profitable which is probably part of the reason for the direct listing. Keep in mind that direct listings don’t benefit the Company with IPO proceeds but rather enables insiders to sell their shares.
On June 21, 2021, a slew of brokers started coverage on ZipRecruiter stock. The most bullish was Raymond James with a Strong Buy rating accompanied by a $36 price target. Goldman Sachs (NYSE: GS) rated ZIP shares a Buy with a $28 price target. Both William Blair and Evercore ESI provided outperform ratings without a price target. JP Morgan (NYSE: JPM) started at a Neutral rating with a $24 price target. On July 1, 2021, Barclays initiated coverage with an Overweight rating with a $30 price target. The Company is expected to release its first earnings report as a public company in August 2021. As more color becomes available on its current business operations, the price discovery period since the IPO will start to solidify as the market prices in the value. Risk-tolerant investors can watch for opportunistic pullback levels after the earnings reaction to scale into this leading jobs market play.
ZIP Opportunistic Pullback Levels
Using the rifle charts on the weekly and daily time frames provide a broader view of the price action playing field for RHI stock. The weekly rifle chart is still materializing from the direct listing IPO and requires more data to develop the stochastic and Bollinger Band indicators. However, it has produced a 5-period moving average (MA) rising at $25.16 during the price discovery process. The daily rifle chart has all indicators operating as shares initially peaked off the $26.91 Fibonacci (fib) level. The daily 5-period moving average (MA) has been rising at $26.01 with upper BBs at $27.30. The daily stochastic is rising towards the 80-band for a mini pup or a reversion pullback on a rejection. The daily market structure high (MSH) sell triggers below $25.93, while the daily market structure low (MSL) buy triggered on the break through $24.56. Prudent investors can monitor for opportunistic pullback levels at the $25.13 fib, $24.56 fib, $23.62 fib, $23.16 fib, $22.64 fib, and the $21.37 fib. The upside trajectories range from the $27.98 fib to the $34.42 fib.