Vimeo: Buy, Sell, or Hold?

: VMEO | Vimeo Inc. News, Ratings, and Charts

VMEO – Shares of all-in-one video platform Vimeo (VME) have been rebounding in price over the past five days, following extended losses due to the tech rout earlier this year. However, with mixed revenue and earnings growth prospects, should one invest in VMEO now? Read more to learn our view.

New York City-based Vimeo, Inc. (VMEO) is a leading all-in-one video software solution platform with more than 230 million users worldwide. It operates as a software-as-a-service (SaaS) platform offering over-the-top (OTT) streaming and monetization services. The company has been named one of the world’s most innovative companies by the Fast Company for the fifth time in 2022.

However, shares of VMEO have plunged 29.9% in price year-to-date due to the tech sell-off earlier this year. 

But as the equity markets stabilize, VMEO has gained 5.6% over the past five days to close yesterday’s trading session at $12.54.

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

Decelerating Growth Trends

VMEO’s revenues grew 23% year-over-year in February 2022. This compares to the 54% year-over-year revenue growth rate it registered in February 2021. The company’s total subscribers grew 8% year-over-year last month, compared to 26% growth reported in the same period last year. Furthermore, VMEO’s average revenue per user grew 13% year-over-year in February 2022, down 1400 basis points from the 27% growth rate registered in the same month in 2021.

In addition, VMEO’s total revenues grew 23% year-over-year in January 2022, compared to 57% year-over-year growth recorded in January last year. The company’s total subscribers and average revenue per subscriber rose 10% and 12%, respectively, year-over-year this January. This compares to 25% year-over-year growth in subscribers and a 26% year-over-year increase in average revenue per user reported in January 2021.

Mixed Financials

VMEO’s revenues increased 26.6% year-over-year to $106.10 million in its fiscal fourth quarter, ended Dec. 31, 2021. Its gross profit came in at $79.50 million, up 35.2% from the same period last year. In addition, the company’s gross margin rose 500 basis points from the prior-year quarter to 75%.

However, VMEO’s operating loss worsened 537.8% year-over-year to $23.60 million. Its net loss came in at $24 million, compared to the $5.80 million loss reported in the year-ago quarter. The company’s loss per share worsened 275% from the same period last year to $0.15. And its adjusted EBITDA loss amounted to $7.60 million, compared to a $0.70 million gain reported in its fiscal year 2020 fourth quarter.

Mixed Growth Prospects

Analysts expect VMEO’s revenues to improve 18% in its fiscal 2022 first quarter (ending March), 14.5% in the next quarter, and 16.3% in fiscal 2022. However, consensus EPS estimates indicate a 9.6% decline in its fiscal 2022 second quarter (ending June 2022) and a 65.7% decline in the current year. Furthermore,  the Street expects VMEO’s EPS to remain negative until at least 2023.

Consensus Rating and Price Target Indicate Potential Upside

Among the six Wall Street analysts that rated VMEO, four rated it Buy while two rated it hold. The 12-month median price target of $19.17 indicates a 52.9% potential upside from yesterday’s closing price of $12.54. The price targets range from a low of $12.00 to a high of $25.00.

POWR Ratings Reflect Uncertainty

VMEO has an overall C rating, which translates to Neutral 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 C grade for Quality and Sentiment. VMEO’s trailing-12-month gross profit margin of 73.82% is 44.9% higher than the industry average of 50.95%. However, its trailing-12-month net income margin is negative 13.47%, justifying the Quality grade. In addition, the mixed revenue and earnings growth prospects justify the Sentiment grade.

Of the 24 stocks in the Software – SAAS industry, VMEO is ranked #16.

Beyond what I have stated above, view VMEO ratings for Momentum, Growth, Stability, and Value here.

Click here to check out our Software Industry Report for 2022

Bottom Line

VMEO has benefited from the increased use of social media and OTT platforms since the onset of the COVID-19 pandemic, as people resorted to virtual entertainment amid lockdowns and social distancing measures. However, as the global economy reopens, VMEO has witnessed decelerating revenue and subscriber growth. In addition, given VMEO’s negative profit margins, we think investors should wait until VMEO’s bottom line improves before investing in the stock.

How Does Vimeo (VMEO) Stack Up Against its Peers?

While VMEO has a C rating in our proprietary rating system, one might want to consider looking at its industry peers, MiX Telematics Ltd. (MIXT), The Sage Group plc (SGPYY), and Park City Group, Inc. (PCYG), which have a B (Buy) rating.


VMEO shares were trading at $12.46 per share on Thursday morning, down $0.08 (-0.64%). Year-to-date, VMEO has declined -30.62%, versus a -5.85% rise in the benchmark S&P 500 index during the same period.


About the Author: Aditi Ganguly


Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
VMEOGet RatingGet RatingGet Rating
MIXTGet RatingGet RatingGet Rating
SGPYYGet RatingGet RatingGet Rating
PCYGGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

Stocks Racing to Bottom

The S&P 500 (SPY) has raced 15% lower in just a few short weeks. Sure we might see a short term bounce here or there. Unfortunately most signs still point lower. Why is that the case? How much lower could we go? And what is the best way to trade this market? 40 year investment veteran Steve Reitmeister provides the answers in his new market outlook below...

:  |  News, Ratings, and Charts

2 Stocks Under $50 Worth Snapping up Right Now

With the market volatility and odds of recession perpetually increasing with every interest rate hike by the Federal Reserve, investors would be advised to load up on attractively priced stocks of businesses with robust demand and stable growth trajectory. Hence, fundamentally sound stocks Kroger (KR) and APA (APA), currently trading under $50, could be ideal investments. Keep reading…

:  |  News, Ratings, and Charts

3 Stocks You'll Want to Leave out of Your Retirement Portfolio

The stock market is experiencing wild swings amid the consecutive Federal rate hikes and deteriorating investor sentiments. Moreover, the aggressive rate hikes are raising recession concerns. Therefore, fundamentally weak stocks Uber Technologies (UBER), Workhorse Group (WKHS), and AppHarvest (APPH) might be best avoided for your retirement portfolio. Also, these stocks do not pay dividends. Read on…

:  |  News, Ratings, and Charts

The Worst Stock to Buy During Times of High Inflation

Rent the Runway (RENT) is slated to cut its workforce by 24% in the face of declining consumer spending amid soaring prices. Its subscriber count dropped in the last quarter. The stock has lost more than 70% year-to-date. Given the stubbornly high inflation, RENT might be best avoided. Keep reading…

:  |  News, Ratings, and Charts

3 Stocks You'll Want to Leave out of Your Retirement Portfolio

The stock market is experiencing wild swings amid the consecutive Federal rate hikes and deteriorating investor sentiments. Moreover, the aggressive rate hikes are raising recession concerns. Therefore, fundamentally weak stocks Uber Technologies (UBER), Workhorse Group (WKHS), and AppHarvest (APPH) might be best avoided for your retirement portfolio. Also, these stocks do not pay dividends. Read on…

Read More Stories

More Vimeo Inc. (VMEO) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All VMEO News