Stock Breakdown Newsletter: Nerdwallet - $NRDS

Where nerds come together to do personal finance

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Newsletter Date: AUG 2024

Ticker Symbol: NRDS
Stock Price: $10.50
Website: https://www.nerdwallet.com/
Headquarters: 55 Hawthorne St. - 10th Floor, San Francisco, CA 94105
Incorporated: 2009
Investor Relations: https://investors.nerdwallet.com/

PART 1: The Business

Overview

NerdWallet is a personal finance website and business which provides consumers with advice/content in the form of articles/videos/advisors, financial tools like calculators and personal finance resources like savings accounts.

Number of employees = 730

How does the company make money?

NerdWallet makes money through its website’s affiliate marketing: credit cards, personal loans, small business products, lead generation advertising and what NerdWallet calls ‘Emerging Verticals’ including: banking, investing and insurance products.

Who is the target customer for this business?

NerdWallet is appealing to a diverse range of consumers:

• Young adults and millennials

• Professionals

• Individuals with debt or looking for credit

• Small business owners

• Financially literate consumers

• Retirees

• General consumers looking for financial information

History

NerdWallet was founded in 2009 by Tim Chen and Jacob Gibson to provide consumers with practical finance information. It was originally started as a spreadsheet to to compare credit card offers.

When was the company founded?

2009

Founding and Early Years (2009-2012)

2009:

• Founding: Tim Chen, a former hedge fund analyst, started NerdWallet after experiencing difficulty in comparing credit card options. Tim Chen aslo an economics degree from Stanford University. With a $800 initial investment, he created a simple spreadsheet to compare credit cards. He was soon joined by Jacob Gibson.

• Jacob Gibson was the Chief Operations Officer for many years before starting Better Tomorrow Ventures, a venture capital firm focused on Fintech.

• Website Launch: The NerdWallet website was launched in 2009, offering consumers the ability to compare credit card offerings.

2010-2011:

• Expansion of Content: NerdWallet expanded its content to include a wider range of financial products beyond credit cards, such as banking and investment accounts.

• Growing Traffic: The site began gaining traction as consumers found its tools and advice helpful for making financial decisions.

2012:

• First Major Investment: NerdWallet received its first major outside investment, securing $2 million from investors. This funding was used to expand the team and improve the website’s features and user experience.

Growth and Diversification (2013-2017)

2014:

• During this time NerdWallet focused on financial content which drove users to its site. In this year the business boasted of having over 30 million users. These users were visitors to their site which allow for increased advertising and referrals.

• Product Expansion: NerdWallet introduces Travel resources. During this year the business also started offering information on the topic of mortgages.

2015:

• Content and Tools Expansion: NerdWallet broadened its range of tools and content to include more comprehensive financial advice, including personal loans, mortgages, insurance, and budgeting.

• Product Expansion: NerdWallet introduces student loans information and content.

• Acquisitions: NerdWallet acquired several smaller financial advice sites to expand its reach and capabilities.

2016:

• Series A Funding: NerdWallet raised $64 million in Series A funding led by IVP (Institutional Venture Partners), which was a significant boost for the company. This funding round valued the company at around $500 million.

• Mobile App Launch: NerdWallet launched its mobile app to provide users with on-the-go access to financial advice and tools.

2017:

• Content Expansion: The company continued to grow its editorial team, producing a vast array of articles, guides, and reviews on various financial topics.

• Product Expansion: NerdWallet introduces consumer banking referral services. During this time Nerdwallet also began offering small business banking, loans, insurance and financial management services.

• Rebranding: NerdWallet undertook a rebranding effort to better align its image with its mission of providing clarity in financial decision-making.

Scaling and Further Development (2018-Present)

2018:

• Market Position: NerdWallet established itself as a leading personal finance website, with millions of monthly visitors seeking its advice and tools.

• Continued Growth: The company focused on improving user experience and expanding its reach through strategic partnerships and enhanced SEO efforts.

2019:

• 10th Anniversary: NerdWallet celebrated its 10th anniversary, marking a decade of helping consumers make informed financial decisions.

• Employee Growth: The company grew its team significantly, with a focus on hiring experts in various financial fields.

2020:

• COVID-19 Response: During the COVID-19 pandemic, NerdWallet provided resources and guidance to help consumers navigate the financial uncertainties caused by the pandemic.

• Further Acquisitions: NerdWallet acquired Fundera, a small business loan marketplace, to expand its services to small business owners.

2021:

• IPO Consideration: NerdWallet began considering going public, exploring options for an initial public offering (IPO) to fuel further growth and expansion.

• Growth and Innovation: The company continued to innovate, adding new tools and features to help users manage their finances more effectively.

When did the company go public?

NerdWallet started trading on the NASDAQ exchange on November 4, 2021 taking advantage of the stock market rise post Covid downturn. Many people were struggling financially turning to NerdWallet, as well as being stuck at home with more time to browse the web. Many businesses went public at this time.

The business began trading at $28 per share. It has not surpassed this stock price since going public.

2022-Present:

• Public Listing: In November 2021, NerdWallet went public via an IPO, trading under the ticker symbol NRDS on the Nasdaq.

• Expansion Efforts: NerdWallet has continued to expand its offerings and improve its technology platform to better serve its growing user base.

• Global Reach: The company has also started to explore international markets, aiming to provide its services to a global audience.

What could the future of this business look like?

From the humble beginnings of an Excel spreadsheet NerdWallet continues to add financial products and services to their loyal base. They will continue to add product referral partners. They will continue to provide financial content to users, this could translate into higher advertising revenue.

They recently launched a NerdWallet+ program where members can pay a monthly fee for premium services where users can earn points which translate to redeemable cash.

NerdWallet is and plans to continuing being the location where an individual can get a snapshot of the entire financial health. Net worth, credit score etc.

Future Product and Service Expansion

• New Financial Products: Introduce comparisons and tools for additional financial products such as cryptocurrency wallets, ESG (environmental, social, and governance) investments, and health savings accounts (HSAs).

• Financial Planning Services: Offer personalized financial planning services, including one-on-one financial advising and planning tools.

• Small Business Services: Expand services targeted at small businesses, including payroll services, tax preparation software, and business insurance comparisons.

Future Geographic Expansion

• International Markets: Enter new international markets to provide financial advice and comparisons tailored to local financial products and regulations.

• Localized Content: Create content and tools specific to different countries, addressing the unique financial needs and regulations of each market.

Future Technology and Innovation

• Mobile App Enhancements: Continue improving the mobile app by adding new features, such as AI-driven personalized financial advice, integration with financial accounts for real-time insights, and enhanced security features.

• AI and Machine Learning: Use AI and machine learning to provide more personalized and predictive financial advice, helping users anticipate and prepare for future financial needs.

• Data Analytics: Leverage big data analytics to gain deeper insights into consumer behavior and trends, allowing for more targeted and effective content and service offerings.

Future Strategic Partnerships and Acquisitions

• Partnerships with Fintech Companies: Partner with fintech companies to integrate innovative financial tools and services, such as robo-advisors, peer-to-peer lending platforms, and automated savings apps.

• Acquisitions: Acquire complementary financial services platforms or technology companies to expand capabilities and user base.

Future Content and Community Building

• Educational Initiatives: Expand educational content and resources, including webinars, online courses, and financial literacy programs.

• User Community: Build a strong community around NerdWallet through forums, user groups, and social media engagement, allowing users to share experiences and advice.

Future Enhanced Marketing and Branding

• Brand Awareness Campaigns: Invest in marketing campaigns to increase brand awareness and attract new users, including social media marketing, influencer partnerships, and traditional advertising.

• Referral Programs: Implement referral programs that incentivize existing users to bring new users to the platform.

Future Improved User Experience

• User Feedback Integration: Continuously gather and integrate user feedback to improve the website and app, ensuring they are user-friendly and meet consumer needs.

• Personalization: Enhance personalization features to provide tailored financial advice and product recommendations based on individual user profiles and behavior.

Future Regulatory and Compliance Excellence

• Staying Ahead of Regulations: Ensure compliance with all relevant financial regulations and proactively adapt to regulatory changes, building trust with users.

• Transparency: Maintain and enhance transparency in operations, ensuring users trust NerdWallet’s recommendations and services.