Can Backblaze's (BLZE) Rising Share Price Outpace Its Slower Revenue Growth Expectations?

• Over the past month, Backblaze, Inc. (NASDAQ:BLZE) saw its shares advance strongly, even though analysts project its revenue will grow at a slower pace than the broader IT industry.
• This disconnect between market enthusiasm and modest growth expectations has drawn attention to whether the company's valuation can be supported by its current fundamentals.
• We’ll explore how the surge in Backblaze’s share price, despite its subdued revenue outlook, may affect its overall investment narrative.

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Backblaze Investment Narrative Recap

To be a shareholder in Backblaze today, you need to believe that its position as a cost-focused cloud storage provider to data-intensive sectors like AI will drive sustainable top-line growth, despite industry competition and slower revenue expansion compared to peers. The recent 28% share price surge brings attention to whether ongoing AI-driven demand can offset competitive pressures, but it does not materially change the immediate importance of broadening its enterprise customer base or the continued risk from pricing pressure by larger hyperscalers.

Of the recent announcements, the launch of a US$10 million share buyback program on August 7 stands out as the most relevant to the current situation. While this move helps support the share price and may offset some dilution from stock-based compensation, it does not address the core concerns about the company's slower revenue growth relative to the broader IT sector or the risks from industry giants.

However, investors should be aware that while the share price rallies, continued downward trends in net revenue retention...

Read the full narrative on Backblaze (it's free!)

Backblaze's narrative projects $204.8 million revenue and $13.0 million earnings by 2028. This requires 14.3% yearly revenue growth and a $56.6 million increase in earnings from the current -$43.6 million.

Uncover how Backblaze's forecasts yield a $11.30 fair value, a 20% upside to its current price.

Exploring Other Perspectives

Community fair value estimates for Backblaze range from US$11.30 to US$25.20, based on three distinct Simply Wall St Community perspectives. With competitive price pressure still looming, you may find that this influences opinions on whether current market enthusiasm can be sustained.

Explore 3 other fair value estimates on Backblaze - why the stock might be worth just $11.30!

Build Your Own Backblaze Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Backblaze research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.
• Our free Backblaze research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Backblaze's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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