Creator-first technology company Creatd, Inc. (CRTD - Get Rating) in Fort Lee, N.J. offers its flagship product, Vocal–a content distribution platform that delivers a digital publishing platform organized into niche communities capable of hosting various rich media content. The company’s Vocal subscribers reached a milestone, surpassing 1 million creators during 2021. Total Vocal Creators at year-end totaled more than 1.30 million.

“We accomplished a great deal during 2021, including establishing a foundation of recurring subscription revenues originating from both Vocal and our direct-to-consumer e-commerce businesses, as well as securing contract renewals with numerous key brand clients. The steady growth of Vocal’s creator base combined with the continued expansion of WHE’s influencer roster has allowed Creatd to extend its global digital reach to over 175 million today,” according to Creatd CEO Laurie Weisberg.

However, CRTD shares have slumped 67.6% in price over the past year and 46.9% year-to-date. The stock soared following the company’s announcement of the launch of a new partnership between Dune Glow Remedy (“Dune”), its owned-and-operated wellness beverage brand, and international lifestyle retailer Urban Outfitters Inc. (URBN) last week. But it is down 12.3% over the past five days, closing yesterday’s trading session at $1.11.

Here is what could shape CRTD’s performance in the near term:

Bleak Bottom Line

For its fiscal year ended Dec. 31, 2021, CRTD’s net revenues increased 254.5% year-over-year to $4.30 million. However, its gross loss came in at $1.00 million. Its loss from operations increased 104.9% from its  year-ago value to $33.37 million, while its net loss grew 54.4% year-over-year to $37.38 million. The company’s comprehensive loss stood at $37.42 million, up 54.3% year-over-year. And its loss per share came in at $2.98, versus $5.68 in the prior year. Also, its cash balance declined 52% from the prior year to $3.79 million.

Poor Profitability

CRTD’s gross profit margin and levered FCF margin of negative 23.26% and 197.56%, respectively, are substantially lower than the 50.83% and 11.69% industry averages.

Also,  CRTD’s ROE, ROA, and ROTC of negative 1,039.78%, 406.54%, and 305.64%, respectively, compare with the 7.00%, 2.98%, and 3.77% industry averages.

CRTD Looks Overvalued at its Current Price

In terms of trailing-12-month EV/Sales, CRTD is currently trading at 6.07x, which is 160.1% higher than the 2.33x industry average. Also, its 3.47 trailing-12-month Price/Sales ratio  is 109.6% higher than the 1.66 industry average, while its 10.90x trailing-12-month Price/Book  is 452.1% higher than the 1.97x  industry average.

Unfavorable POWR Ratings

CRTD has an overall F rating, which translates to Strong Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

The stock has a D grade for Quality, which is consistent with its negative profit margins.

CRTD has an F grade for Value. Its stretched valuations justify this grade.

Among  the 71 stocks in the F-rated  Internet industry, CRTD is ranked #68.

Beyond what I have stated above, one  can also view CRTD’s grades for Sentiment, Growth, Momentum, and Stability here.

View the top-rated stocks in the Internet industry here.

Bottom Line

The company expects to double its revenues year-over-year in 2022, without a corresponding increase in operating expenses, and improve its operating efficiency. The company plans to pursue accretive acquisitions in the influencer agency and DTC e-commerce spaces and enhance its core proprietary platforms. However, the efficiency of its strategies remains to be seen and analyzed. And considering its negative ROE and bleak bottom line, we think it could be best to avoid the stock now.

How Does Creatd, Inc. (CRTD) Stack Up Against its Peers?

While CRTD has an overall POWR Rating of F, one might want to consider investing in the following Internet stocks, trivago N.V. (TRVG - Get Rating), which has an A (Strong Buy) rating, and Yelp Inc. (YELP - Get Rating) and Travelzoo (TZOO - Get Rating) which have a B (Buy) rating.

Note that TRVG is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Stocks Under $10 portfolio. Learn more here.

CRTD shares fell $0.04 (-3.60%) in premarket trading Wednesday. Year-to-date, CRTD has declined -46.89%, versus a -6.01% rise in the benchmark S&P 500 index during the same period.

About the Author: Subhasree Kar

Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics. More...

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