We came across a bullish thesis on ZipRecruiter, Inc. (ZIP) on Substack by Unemployed Value Degen and Value Don't Lie. In this article, we will summarize the bulls’ thesis on ZIP. ZipRecruiter, Inc. (ZIP)'s share was trading at $6.27 as of April 2^nd. ZIP’s trailing and forward P/E were 34.29 and 31.15 respectively according to Yahoo Finance.

ZipRecruiter (ZIP) has undergone a dramatic transformation, experiencing a steep decline in revenue from its 2022 peak of $905 million to $474 million in 2024. This 48% drop is a direct result of the ongoing white-collar hiring slowdown, exacerbated by the tech industry’s efficiency-driven cost-cutting and the uncertain impact of AI on employment. Despite this downturn, ZIP remains a key player in the online job marketplace, leveraging its AI-powered job board to create value for both job seekers and employers. While overall hiring demand has slowed, ZIP has strategically focused on deepening its relationships with employers, leading to a significant increase in average spending per customer. Employers who started using ZIP in 2023 are already paying nearly double compared to their 2017 counterparts, showcasing the company’s ability to extract more value from its existing user base even amid macroeconomic headwinds.

The core challenge for ZIP is determining whether its revenue decline is a temporary cyclical setback or a more permanent loss of market share. Rough estimates suggest ZIP’s market share in the online recruitment space peaked at 10% in 2022 but has since reverted to around 5% in 2024. This leaves open the critical question of whether the decline is primarily due to reduced hiring in ZIP’s core industries or whether it is losing ground to competitors like Indeed and LinkedIn. The encouraging sign is that ZIP’s most engaged employers continue to spend more, reflecting a sticky customer base that sees value in the platform. If white-collar hiring rebounds and ZIP can regain lost market share, its revenue could easily double from current levels. However, if the slowdown is structural rather than cyclical, ZIP may struggle to return to its previous highs.

Despite the uncertainty, the valuation setup is compelling. ZIP is currently trading at just 1.22x price-to-sales, down from its peak multiple of over 3.0x. A simple return to historical multiples would more than double the stock price, but if revenues also recover, the potential upside becomes far more dramatic. A full return to peak revenue and valuation levels would imply a nearly 4.7x return. In a more aggressive scenario, where ZIP regains its lost employer base and scales further, the upside could reach 11x. The 48% decline in revenue understates the 66% decline in employers using the ZIP platform, and whether ZIP can reclaim this lost ground remains uncertain. However, with a sticky customer base and a strong value proposition, the company is positioned for significant upside if hiring conditions improve. Given the current price of $6.19, the price target for ZIP is between $25 and $64 at some point between 2026 and 2028.

ZipRecruiter, Inc. (ZIP) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 18 hedge fund portfolios held ZIP at the end of the fourth quarter which was 14 in the previous quarter. While we acknowledge the risk and potential of ZIP as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ZIP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.