Backblaze (BLZE) Stock Forecast & Price Target

Backblaze is a strong investment opportunity due to several factors including: an affordable cloud storage offering that resonates with larger AI and neocloud customers, as evidenced by the new multi-year CoreWeave agreement; AI driving increased demand for cloud storage; B2 cloud service being the larger revenue contributor and sustaining 20% growth; attractive valuation and a large TAM of $118B by 2028; and a resilient business model with high NRR and GRR. However, potential risks include competition from larger cloud companies, stunted growth, the need for further investment in traditional data storage, brand and reputational risks, and path to profitability.

Backblaze is a cloud storage company that has yet to achieve sustainable profitability, with Adjusted EBITDA Margins of (11%)/(4%) in2022/2023, and even steeper losses on an adjusted Free Cash Flow basis. While the company has a strong portfolio of products and potential for customer expansion and increasing prices, they have notable challenges ahead with achieving sustainable profitability and managing growing capex requirements. Additionally, the recent $335M contract with CoreWeave is a major win, but the company will need to closely manage the ramp-up in both revenue and capex.