One Paltalk, Inc. (NASDAQ:PALT) Broker Just Cut Their Revenue Forecasts By 17%

The latest analyst coverage could presage a bad day for Paltalk, Inc. (NASDAQ:PALT), with the covering analyst making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic. Investors however, have been notably more optimistic about Paltalk recently, with the stock price up a majestic 34% to US$2.57 in the past week. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.

Following this downgrade, Paltalk's one analyst are forecasting 2023 revenues to be US$11m, approximately in line with the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 32% to US$0.25. Yet before this consensus update, the analyst had been forecasting revenues of US$13m and losses of US$0.23 per share in 2023. So there's been quite a change-up of views after the recent consensus updates, with the analyst making a serious cut to their revenue forecasts while also expecting losses per share to increase.

Check out our latest analysis for Paltalk

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's also worth noting that the years of declining sales look to have come to an end, with the forecast for flat revenues to the end of 2023. Historically, Paltalk's sales have shrunk approximately 15% annually over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 9.8% annually. So it's pretty clear that, although revenues are improving, Paltalk is still expected to grow slower than the industry.

The Bottom Line

The most important thing to take away is that the analyst increased their loss per share estimates for this year. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Paltalk after today.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2024, which can be seen for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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