Are Expanding Partnerships Enough to Support Klaviyo’s Value After a 33.6% Drop?

• Ever wondered whether Klaviyo is a bargain at current prices, or if there is more risk than reward hiding in the numbers? If you are eyeing this stock’s place in your portfolio, you are definitely not alone.
• The share price has seen ups and downs lately. It slipped 3.4% this past week but gained 5.0% over the last month. These movements make investors wonder if the tides are turning or if rougher waters lie ahead after a 33.6% drop year-to-date.
• Recent news has highlighted Klaviyo’s expanding partnerships in the e-commerce ecosystem. This move has caught the attention of both analysts and competitors. Announcements about integrations with major platforms appear to be fueling speculation about the company’s growth runway and competitive edge.
• Klaviyo currently scores 3/6 on our valuation checks, meaning it looks undervalued on half of the key metrics our analysts use. Next, we will break down the common approaches to valuing the company, then explore a fresh perspective on what value really means for investors.

Find out why Klaviyo's -25.1% return over the last year is lagging behind its peers.

Approach 1: Klaviyo Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model takes Klaviyo's expected future cash flows and calculates their present value. This gives investors a sense of what the business may actually be worth today. This method relies on long-term forecasts of free cash flow that are adjusted for time and risk.

Currently, Klaviyo's free cash flow stands at $162.6 million. Analyst estimates are available for about five years, but more distant projections are extrapolated by Simply Wall St. By 2029, projected free cash flow is expected to be around $216.1 million, with total annual free cash flows over the next decade expected to gradually increase in modest steps rather than dramatic leaps.

After applying this methodology, Klaviyo’s estimated intrinsic value comes to $11.66 per share. With the stock price much higher than this calculated value, the DCF model suggests the company is approximately 137.1% overvalued based on today’s cash flow outlook and projections.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Klaviyo may be overvalued by 137.1%. Discover 917 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Klaviyo.

Approach 2: Klaviyo Price vs Sales

The Price-to-Sales (P/S) ratio is often a preferred valuation tool for software companies like Klaviyo, especially when they are reinvesting heavily in growth and not yet reliably profitable. The P/S ratio allows us to compare a company's market value to its actual revenue, making it easier to assess its standing even if earnings fluctuate or are negative.

Not all P/S ratios are created equal. A higher P/S ratio can be justified if investors expect a company to grow revenue quickly and sustainably, or if they see less risk in future performance. On the other hand, slower growth or bigger risks tend to push that multiple down.

Klaviyo is currently trading at a P/S ratio of 7.23x. That is right in line with the average among its closest peers, which sits at 7.32x, and quite a bit above the broader software industry average of 4.43x. So, at first glance, Klaviyo appears fairly valued compared to its direct competition but at a premium to the wider sector.

Simply Wall St's "Fair Ratio" goes a step further by factoring in unique aspects of Klaviyo’s business, such as its revenue growth, profit margins, risk profile, industry dynamics, and market cap. This proprietary approach moves beyond simple peer or industry comparison and offers a more holistic benchmark for what Klaviyo's P/S ratio should be in an efficient market.

For Klaviyo, the Fair Ratio is calculated at 8.50x. Since the company’s actual P/S ratio is slightly below this, the analysis suggests Klaviyo may be modestly undervalued based on this model.

Result: UNDERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1421 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Klaviyo Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. Narratives are simply your story about a company; they connect your predictions for future revenue, profit margins, and fair value to the reasoning and context behind those estimates.

Rather than just focusing on rigid numbers, Narratives let you frame Klaviyo’s potential in your own words, linking financial forecasts with the business facts, risks, and opportunities you see. This approach helps explain not only what you think Klaviyo could be worth, but why. It gives meaning and direction to dry data.

Narratives are easily accessible to anyone in the Simply Wall St Community, where millions of investors share and update their views. You can quickly compare your fair value for Klaviyo with others, check how it stacks up against the latest price, and see real-time changes when news or earnings emerge. This means you are always working with the freshest perspectives, making it much easier to decide when to buy, hold, or sell.

For example, at the time of writing, Klaviyo's Community Narratives range from a bullish $60.00 price target based on rapid innovation and international expansion, to a more cautious $37.00 citing intense AI-led competition and margin concerns.

Do you think there's more to the story for Klaviyo? Head over to our Community to see what others are saying!

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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