Nerdwallet will surprise to the upside - stock reflects too much pessimism

Diversification is not only important in the investing world but in the business world in general. Companies that rely on a specific product or service to generate revenue have a high concentration risk that makes their business model risky.

NerdWallet ($NRDS), the parent of the homonymous personal finance site, is a great example of a company with well-diversified operations that allow it to continue to grow even amid a challenging macro environment.

Yet, as you can see below, the stock has underperformed this year. This is because growth is expected to slow to just 1% y/y in the next quarter, as its diversified operations can’t fully offset the impact of high interest rates on the company’s operations.

While NRDS faces short-term growth headwinds, its underlying fundamentals remain strong. Its diversified business model can allow the company to accelerate its growth in 2024 and beyond, making the stock very attractive near all-time lows. The stock reflects too much pessimism that seems to be unjustified. Here’s why.

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