Every stock I ever bought, that did well, was because the company that issued the stock met a need in the marketplace. This is the gold standard for investing: does the prospective company, in which you are considering investing your money, meet a clear need in the marketplace?
I believe that Shutterstock is one of those companies that meet such a great need, and therefore it is bound to do well, leading to abundant growth, and a rising stock price. Shutterstock came to my attention because I have a blog. A blog has to have content. A blog cannot, however, only have text. People don’t like reams of words. A blog has to have visual aids such as pictures, otherwise readers feel overwhelmed and lose interest. So, I ended up licensing a lot of pictures from Shutterstock.
Shutterstock licenses pictures, videos, music, and a few other things. They do a very good job of it. The pictures are shockingly simple. A picture of two happy people carrying boxes into a house, with keys on a table. The obvious use for such a picture is that it depicts what many people experience – the happiness of buying — and moving — into a new house. Pictures like this can be easily incorporated into the advertising for any company that is involved in the sale of real estate.
A picture like this can go on a website, in brochures, on social media, in a corporate communication – essentially in any advertising media – for, in this case, home sales. And Shutterstock has roughly 28 million pictures, illustrations, videos, music sounds, for every kind of activity imaginable, meeting every kind of need imaginable. In fact, Shutterstock has met such a broad advertising need through its simple pictures that it has become a global marketplace for businesses to easily and conveniently incorporate visual aspects into their work product and advertising. Shutterstock pulled off the ultimate coup – they made a product virtually everyone needs to help advertise every kind of business. It is both a product manufacturing company and a service company.
This reminds me of the lesson learned from the car industry – which stock should you buy? A car stock or a tire stock? Tires, of course. Because not everyone loves a particular kind of car; but every car has to have four tires. Same for Shutterstock: everyone needs advertising and Shutterstock has a picture, illustration, graphic design, a video, or a music track for every kind of business. Now that’s winning.
Income Statement and Balance Sheet
Let’s look at their published numbers. From 2016 to 2020, their income has gone from $494 million to $667 million. That is a rough 40% raise in income over a five year period. Nice. In this same time frame, their total assets have enjoyed a 45% rise from $502 million to $730 million, a rough while their liabilities have only gone from $215 million to $308 million, a 40% increase, clearly indicating that Shutterstock’s assets are increasing ahead of liabilities. The liabilities are nothing out of the ordinary — accounts payable, accrued expenses, customer advances, income taxes expense, etc. In this same time frame, they have incurred no short term debt or long term debt. Since the assets are not increasing through financial strategy via debt, income is most likely coming from increased sales.
And there is a great back story. Co-founded by Jay Oringer in New York in 2003, Shutterstock was Oringer’s tenth try at owning a company. He needed images to market his pop up blocker business. He recognized that it was hard to get general images to support the message for his advertising, so he started creating general images for his own advertising. Soon he noticed these images improved the subscription rates to his business, and thus Shutterstock was born. Shutterstock made its stock debut in 2013.
Now, only seven years later, Shutterstock has made Originer a billionaire. Such a simple idea, so easy to understand, and so ubiquitous. These images populate the news and advertising that you see every single day. The internet does not appear to be slowing down, and the need for an easy, convenient way to obtain affordable images continues to grow for not only businesses, but also for individuals. Shutterstock’s simple business model seems destined for growth. Me, I am feeling the headiness of locking onto a new great stock, because it filled a need that I had myself. I had to buy the product, so I am going to buy the stock. Come on. Come on. I rate this a Buy.
The author has a purchase order in play for Shutterstock.
*This article is based on the opinion of the author and does not guarantee the accuracy of the data and shall not constitute a basis of liability for any loss.
