Lizhi (LIZI) stock announced a partnership with Xpeng (XPEV), which put the stock on my radar. They are the #1 largest user generated content audio app in China with over 56 million MUAs (as of Q3 2020).
LIZI Stock Analysis Breakdown
Here are 5 reasons why I'm buying LIZI stock:
- Undervalued – LIzi stock generates around $200 million in revenue yet the market cap is under $200 million. That gives us a P/S ratio of around 1. Clearly, the stock is undervalued since user generated content apps tend to grow over time (think Facebook, Twitter, Youtube, Spotify)
- Xpeng Partnership – The Xpeng partnership will generate more revenue and new listeners on the platform. At just a small market cap, this new partnership allows Lizhi to benefit from the power of proximity.
- Cheap Chinese exposure – It's time to add Chinese stocks to my portfolio since I don't currently have any positions. Lizhi looks cheap and I wanted to get in on the ground floor.
- PCAOB registered auditor – The house passed a bill to delist foreign companies that don't used PCAOB registered accountants. Lizhi uses the same independent auditor as Nio, Pricewaterhousecoopers Zhong Tian LLP.
- Mobile is the future – As more people get connected to the internet, mobile apps will see tremendous growth in the future. I think Lizhi can benefit from this boom in technology.
Future LIZI Stock Forecast & Price Prediction
I bought some shares @ $4.22 and plan to add to my position over time. Lizhi provides plenty of diversity to my portfolio and adds a proven audio app that can continue to generate cashflow in the future. User generated content is big business and let's hope Lizhi cashes in!
Revenue was up 10% YoY and the new partnership will accelerate this trend. As revenue increases, the company will attract new buyer interest.
If we give Lizhi a conserative P/S ratio of 5 to 10 then the stock could be worth $20 to $40 in the near future. It's simply undervalued and underappreciated as a whole.
Future LIZI Stock Price Target = $20 to $40
Remember, this is just a projection based on my personal research. Do your own research and use stop loss orders to limit your downside risk. Thanks for reading!