Clear Secure (YOU) has gained nearly 68 percent from its IPO in late June. The stock is up 15 percent over the last week despite a 16 percent drop on Aug. 3. Is YOU stock a good investment and will it go back up?
In 2010, Clear Secure introduced a seamless and safer travel experience in the aviation industry. The company uses biometric face, fingerprints, and iris scans instead of physical identity documents and manual processes to automate identity verification.
Why YOU stock is going up
YOU stock is up more than 5 percent in the premarket trading session on Aug. 4. The stock rose despite no company-specific news or an analyst upgrade. We can attribute the gains to investors trying to buy the dip. Investors think that YOU stock will surge in the future based on Clear Secure’s growth prospects.
YOU stock is a good investment, but not at this price.
Clear Secure will continue to disrupt the aviation security business with its technology. The company’s main task is to ensure a seamless and safe trip for people using biometric information. As of March 31, 2021, the company served 61 million cumulative platform users across 63 airports and live sports and entertainment partners. Clear Secure is well-positioned to benefit from global economic reopening.
Will YOU stock go back up?
YOU stock could see a sell-off in the near term as investors book profits. The stock has gone up too much, too quickly. According to MarketBeat, analysts' average target price is $45.83 for YOU stock, which is 12 percent below its current price. Among the six analysts tracking YOU, two recommend a buy, while four recommend a hold. None of the analysts recommend a sell. Their highest target price of $52 is 0.3 percent below the stock's current price, while their lowest target of $34 is 35 percent below.
On Aug. 3, J.P. Morgan analyst Paul Chung downgraded YOU stock to neutral from overweight, but maintained its target price of $52. The analyst cited YOU’s elevated valuation multiples for the downgrade. Clear Secure posted revenues of $230.8 million in 2020, which represents a growth of 20 percent YoY. Based on the $9.1 billion market cap, this implies a 2020 price-to-sales multiple of 39.4x.
Biometric security will be in high demand not only at airports, but also at sporting events, concerts, and conferences in the future. The global biometric system market size is expected to reach $67 billion by 2025 from $37 billion in 2020. Overall, the stock should go back up in the medium to long term because the company’s top line could get a boost as its customer base expands.
Clear Secure’s Q2 2021 earnings
Clear Secure is scheduled to report its earnings results for the second quarter of 2021 before the market opens on Aug. 16. In the second quarter, the company is expected to report adjusted EPS of -$0.23 on revenue of $54.1 million.