Many times, the best businesses develop from a personal journey to solve a common nagging problem. That’s the story behind NerdWallet, an all-in-one resource to answer the myriad of questions that come up regarding money and investing. CEO Tim Chen discovered that, prior to NerdWallet’s founding, Google searches yielded a litany of answers surreptitiously designed to lure visitors to specific financial products.
What distinguishes NerdWallet from its competitors is the lack of bias: You get the information you need without suffering through a marketing pitch. Indeed, this could be one of the more popular initial public offerings (IPOs) in recent memory.
When Did NerdWallet IPO?
NerdWallet IPO’d at $23.50 per share on November 4, 2021.
NerdWallet Financial History
As a privately held corporation, you will find it difficult to dissect NerdWallet’s financial details. Nevertheless, according to a TechCrunch article, NerdWallet generates $150 million annually in revenue. According to a profile on the company by Inc.com, the majority of this revenue tally comes from generous finder’s fees: About 5% of the financial guidance firm’s visitors click on product advertising, an easy and lucrative moneymaker.
Of course, that only applies if NerdWallet brings in the traffic. Fortunately for the company, that’s exactly what it’s doing, serving more than 100 million users. Further, NerdWallet has been acquisitive, expanding its financial services footprint through buyouts that include U.K.-based Know Your Money and New York City-based Fundera, which is lending marketplace for small businesses.
Lastly on the financial front, NerdWallet raised a total of $105 million through private funding rounds dating back to 2014. In its last private round, the company raised $5 million from lead investor Camelot Financial Capital Management.
After the stock debuted on November 4, 2021, it shot up from $23.50 per share to nearly $27 per share. The NASDAQ halted trading not soon after, and the stock rose to nearly $34 per share, with the expectation of earning more than $130 million at the time of the debut.
While the broader financial services and advisory market is incredibly competitive and crowded, NerdWallet has significant upside potential due to its powerful brand. Established in 2009 in the midst of the Great Recession, the company cemented itself into the mainstream consciousness at a particularly acute period. Nowadays, when people have money-related questions, manythey turn first to NerdWallet.
And money questions are only going to pour in because of the widescale impact of the COVID-19 pandemic. For instance, while Americans rightfully celebrate their progress against the dreadful virus, the employment level in the country is down roughly 5% from pre-pandemic figures. That translates to millions of people who must stretch their limited resources — and NerdWallet can help navigate such users through this extraordinary difficulty.
Moreover, dramatic interest in stock trading only incentivized the NerdWallet IPO. Before the public health crisis, an alarming number of millennials simply didn’t invest. But a seismic attitude shift that occurred in 2020 — largely brought on by the work-from-home pivot and the distribution of stimulus checks — saw young people invest in droves. Naturally, they had questions, which bolstered NerdWallet’s business.
On the other hand, the company — along with the financial advisory industry in general — faces risks in an equities sector decline. While it’s possible to profit from bear markets, such tactics entail severe risks and are not suitable for NerdWallet’s core audience.
How to Buy NerdWallet Stock
Also, if you already know how to buy stocks, this process is straightforward. If you don’t, follow the easy steps below.
- Pick a brokerage.
Online brokers have come a long way since their humble beginnings, offering the same features and functionalities of traditional brokerages but with the convenience of the internet. Moreover, with the rise of mobile investment apps, online brokerages now offer extremely competitive incentivizes, such as commission-free trading.
This leaves you free to make your decision based on your personal preferences and ambitions. For busy worker bees, you may find a mobile app more than adequate. But should you want to develop your trading craft, you should elect a comprehensive full-service platform.
Below is a list of best brokers to consider.
- Decide how many shares you want.
Ultimately, your share count determines your risk-reward profile. The more shares you own (relative to their price), the more exposed you are to their market fluctuations. Therefore, only invest a higher percentage of your available funds on your best ideas. Otherwise, you run the risk of not having enough money to participate in quality opportunities.
Above all, make sure that you make your share count decision prior to the opening bell. The last thing you want is to let the emotions of the moment influence your monetary decisions.
- Choose your order type.
Before you make your first trade, make sure to understand the below concepts and the differences between order types.
Bid: The bid is the highest price a buyer will extend. It is always lower than the ask.
Ask: In contrast, the ask is the minimum price that a seller will take. It is always higher than the bid.
Spread: This is the difference between the bid and ask price. The spread also signifies market liquidity and risk. Narrower spreads indicate higher liquidity levels and lower risk primarily because of the abundance of buyers. Wider spreads signal lower liquidity and higher risk due to lack of buyers.
Limit order: If you want to buy stock only at a specific price, choose a limit order. Note that there’s no guarantee a limit order will be fulfilled.
Market order: To buy shares at the going rate, place a market order, which executes at the next available price. The terms are least favorable to you, with buy orders executing on the ask and sells on the bid.
Stop-loss order: A protective function, a stop-loss order exits you out of your position at either a predetermined price, or if a new sessions opens much lower than the previous session (gap-down session), the next available price.
Stop-limit order: Stop limits only fulfill at a predetermined price, which helps prevent the negative surprise of a gap-down session. But if the price continues to fall following a gap-down session, you would have been better off with a stop-loss order.
- Execute your trade.
To execute a market order, take these steps:
Select action type (buy or sell).
Enter the shares you want to acquire (or sell).
Hit the Buy (or Sell) button.
You follow an identical process above for limit orders, with the exception that you must enter your desired price of execution.
Best Online Stock Brokers
A Fascinating Debut That’s Market-Dependent
Everybody has questions about their money. Whether that’s regarding the best stocks to buy for retirement planning or how to increase your chances of scoring an upgrade on a flight, NerdWallet has the answers that you can trust and none of the ulterior motives from lesser online resources.
Mass-scale interest in the stock market also bolstered the narrative for NerdWallet’s IPO and subsequent success. Still, it remains to be seen if the company can achieve prolonged success in a bear market.