Is it worth chasing the rally in NerdWallet stock?

The market may not be efficient for short periods of time, but market inefficiencies actually create opportunities for higher-than-normal returns. Warren Buffett has become the most successful investor of all time by spotting and taking advantage of market inefficiencies.

On Friday, the shares of NerdWallet ($NRDS) soared 40%, fixing a market inefficiency that lasted for a couple of weeks. Before Friday’s spike, NRDS stock was down 50% over the past 6 months, even though the underlying fundamentals have only gotten stronger.

NRDS is not immune to the challenging macro environment. Its growth has slowed significantly in recent quarters. Its Q4 guidance suggests a slight drop in revenue. However, the company has raised its profit outlook for the full year, showing that the business is becoming more efficient over time, even when growth is negative. Let’s see if it’s worth buying NRDS stock at a 50% premium.

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