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Wejo Stock: A Small Company with Huge Potential (NASDAQ: WEJO)

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Investment thesis

Wejo (NASDAQ: WEJO), a leading connected vehicle data company went public last year through a SPAC merger with Virtuoso Acquisition Corp. The company backed by General Motors (GM) and Palantir (PLTR) initially went from $10 to more than $19 per share, but then quickly fell. It got caught up in the high-growth tech selloff and is now trading at $1.88, down more than 90% from its all-time high. I think the selloff is overdone as the fundamentals of the business remain strong. Vehicle data has enormous potential as the number of connected cars grows and Wejo is able to leverage the collected data and provide unique insight into vehicle behavior and operation. Which is then able to help different businesses run more efficiently. The industry is still in its infancy and Wejo has a strong first move and data advantage. I believe the stock is a buy at the current price.

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Data by Y-Charts

Introduction

Data is one of the most important assets of the 21st century. Almost all the data on our phones and computers is collected by companies like Google (GOOG) (GOOGL) and Apple (AAPL). With an increasing number of cars being manufactured being connected cars, Wejo (WEJO), a leading connected vehicle data company founded in 2014, began collecting data from these vehicles to deliver innovative products and services to revolutionize the way we to live, work and travel. . The company works with different OEMs (Original Equipment Manufacturer) like Ford (F), General Motors, Lucid Group (LCID) etc., to integrate more than 14 billion data points directly from the connected vehicles they have manufactured. The data is then used to provide unique insight into different vehicle behaviors. This helps provide many useful products and solutions that other technologies cannot. The four main products and services offered by Wejo are Journey Intelligence, Traffic Intelligence, Vehicle Movements and Driving Events.

travel smarts

Journey Intelligence provides an origin-destination report. it collects unique trip data from millions of connected vehicles, translating billions of data points into actionable insights. It gives businesses and users access to trip volumes as well as valuable metrics like average speed and trip times. It provides insight into mobility trends, which helps businesses make better decisions, innovate and solve problems more effectively.

Traffic information

Traffic Intelligence is the future of traffic reporting that simplifies traffic trends using collected data. The data can be easily translated into information about directional traffic volumes, traffic flows, average speeds and congestion. Wejo is also expanding the traffic data coverage area to further improve the accuracy and density of its traffic intelligence.

Vehicle movement

Vehicle movement helps understand where cars are moving to, from and through in real time to help manage traffic congestion, plan major events and identify high traffic locations. Wejo Data is able to provide location and journey information using its data, such as knowing how many cars are on the road at the moment and where they are heading.

Driving events

Driving events help to understand how cars are driven in order to identify where the incident usually occurs and the various hotspots where hard braking or speeding occurs. Using its vehicle movement data, it is able to identify when parking spaces are in high demand and the volume of arrivals per hour, per minute, peak times and parking space performance.

wejo

wejo

Opportunities

According to Wejo, the addressable market for the connected vehicle data industry is huge. The SAM (usable addressable market) for Wejo is expected to grow to $60 billion in 2030 and the total connected vehicle data market is estimated at $500 billion. Wejo’s products are able to provide useful solutions for different industries such as Automotive, Government & Infrastructure, Fleet & Logistics, Geographic Information System and Enterprise. Here are some examples of how Wejo can help different industries work more efficiently.

wejo

wejo

Automotive

Collected automotive data enables automakers to adapt more effectively in an ever-changing consumer and industry landscape. It increases business efficiency by better understanding driver and owner behaviors. They are then able to optimize marketing spend and also adjust R&D and product development based on specific trends.

Government and infrastructure

By leveraging data from Wejo, governments are able to gain insight into different road usage, car crash hotspots, congestion zones, and more. safer and more sustainable mobility.

Fleet and logistics

Wejo’s data enables fleet and logistics companies to have access to accurate and unique trip data that enables them to better understand mobility trends, road conditions, traffic patterns and timely traffic information. real. Companies are then able to optimize their route by avoiding congestion hotspots and having better planning for their drivers.

The market is expanding as the number of connected vehicles is also growing rapidly. The number of connected vehicles has doubled from 103 million in 2017 to 226 in 2021 and is expected to reach 396 million in 2025. Currently, Wejo collects data from 10 million active connected vehicles, with 9.1 trillion data points already ingested. It is also actively working with 17 OEMs to increase the number of connected vehicles. I think the number of use cases will continue to grow as the amount of data captured increases over time.

wejo

wejo

Finances and evaluations

The company recently released results for the first quarter 2022 and it is showing strong revenue growth. Net revenue for the quarter was $586,000, an 86% increase from $305 million a year earlier. This is mainly due to the strong growth of the Wejo Marketplace data solutions traffic management product line. Gross bookings (total value of new contracts signed with customers during the period) increased over 300% to $6.4 million and gross billings (amounts billed to customers during the period) increased by 138% to $1.9 million. Annual recurring revenue (ARR) is $45 million, an increase of 45%. The number of customers also increased by 122% year-on-year. The result shows that the company is able to onboard new customers while increasing the engagement of current customers. An increase in recurring revenue will also provide a more stable and visible revenue stream in the future. Like most growing businesses, Wejo is still not profitable and has a negative adjusted EBITDA of ($25.2) million. Net loss was ($40.3) million for the quarter, showing a 61% improvement over the prior year. The company’s balance sheet remains healthy with approximately $39 million in cash.

Richard Barlow, CEO, on the first quarter results

“We are extremely excited about Wejo’s progress so far in 2022, as a growing number of high-profile customers recognize the power of our platform and the impact it can have on their businesses. We have managed to convert this awareness into significant growth in gross bookings with a substantial number of new customer offers.

It is very difficult to value a company like Wejo because it always invests heavily in new products, attracts new customers and has minimal revenue with negative cash flow. There are very few to no companies in the market that have a similar business to Wejo. The only measure that can be used in this case is the PS ratio. The company estimated revenue for 2022 to be over $10 million. Based on the indications, this will translate to a PS ratio of around 19. It’s certainly expensive compared to most established companies, but I think the valuation here is not an accurate indicator as revenue of the company can increase exponentially once its activity begins to become more mature.

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Data by Y-Charts

Conclusion

In conclusion, Wejo is a very intriguing company with huge potential in my opinion. Just like other data, vehicle data is very valuable and can provide unique insights to other businesses. The connected vehicle data industry is still in its infancy and Wejo is able to have a competitive edge as it is the first to collect over 9.1 trillion data points from over 10 million connected vehicles. The connected vehicle data industry is a huge market for Wejo and the number of connected vehicles will only increase in the future. The company is already able to transform this data into several products and provide unique solutions to companies in different sectors such as automotive and logistics. These use cases show the value of its offerings and how useful they are. It recorded strong growth in its turnover while integrating new customers. Although it is still showing a net loss and is valued quite expensive, it should be noted that it is still an early-stage operating company. I think Wejo is a buy because the current market cap is only around $200 million, but the opportunity is huge, and I think the company will be able to capitalize on it.