Not very often do investors get the opportunity to buy an industry leader at a discount; today, shares of Shutterstock (NYSE: SSTK) are bringing what could be the deal of the cycle, yet people need to be talking about it. Is there any reason for the secrecy?

Perhaps because the top three owners of the company, amounting to a total ownership rate of 51.7% in the entire firm, would rather keep the upside that this stock carries a secret until they feel it is time for the rest of the world to jump in with them.

Fortunately for you, the homework has been done, and you, too, can get a chance at success. For reasons that will become obvious shortly, Shutterstock is a growth story that owns most of its respective markets despite what the stock chart may imply.

Projected Upside 

Before getting into the weeds of what makes this company a potential buy, it would be helpful to gauge where Wall Street stands.

Shutterstock analyst ratings are landing on a consensus price target of roughly $81.33 a share, which would require the stock to jump by 104.5% from today's prices to make this a reality.

What drives this bullishness? You could start by squinting at the expected EPS jump of over 100%, guided by management as of the latest quarterly results press release.

With all else being equal, the stock price should mimic the same percentage jump in EPS since it is one of the leading valuation drivers. Considering that the stock has declined more than 25% year-to-date, it is unlikely that analysts would expose themselves by being overly bullish on an underperforming stock.

All right, so the stock is expected to be a winner, and analysts are on board with management's thesis, but should investors? It is time to make sense of whether this massive growth is just a fantasy or whether there is a reasonable foundation upon which a rally can be built.

All the Right Moves

When consumers compare cars, the price is typically compared to size, engine, or a KPI (key performance indicator) such as miles per gallon.

In the world of stocks, it is no different, as each industry and company carries its own sets of KPIs that investors can use to scrutinize the value of the business.

For Shutterstock, investors can take that the company has roughly tripled all these metrics during the past three years. From users and contributors to average revenue per consumer, all the charts for Shutterstock go up. The stock chart, however, goes down(?).

Despite what bears may think, Shutterstock provides a higher quality service than competitors. This is why revenues increased during the past quarter despite a 5.1% decline in subscribers. This becomes even more important when investors realize it is an industry - rather than a Shutterstock - problem.

Because most (60%) of revenues in Shutterstock come from the 'E-commerce' segment, representing individual creators or tiny businesses, the current downturn in the United States business cycle is affecting much of the company's revenue.

The remaining 40% of revenue comes from what they call the 'Enterprise' business, which is made up of large clients. This high-profile list exposes Shutterstock to the recovery coming from Netflix (NASDAQ: NFLX), the bottoming cycle in Target (NYSE: TGT), and the expanding digitalization of Walt Disney Co. (NYSE: DIS).

Others may argue that the company is in decline, pointing to the recent decline in operating income. While they may be right, this metric has decreased for all the right reasons. Understanding that the current cycle calls for value creation, mainly catering to large clients, management gets a clap again.

Revenue costs increased by 10% to represent 40.4% of revenue, compared to only 37% last year. Management attributes this increase to paying higher rates to skillful contributors, a talent-retention strategy.

Secondly, product development expenses rose by a massive 70% during the year, to 14% of revenue compared to 8.3%. This is attributed to the company developing superior products for this clientele to lock in - and extend - existing contracts.

New Breakthroughs 

Shutterstock has been choosing to boost its growth prospects via acquisitions, with its latest one being GIPHY, a significant player in the animated conversational content space. 

Second only to Meta Platforms (NASDAQ: META), GIPHY reports daily users of more than 1.7 billion, and this acquisition gives Shutterstock exclusive API access to Meta's infrastructure, exposing it to the new highs the company is looking to break through.

Given that the transaction is new, management does not expect it to be accretive to revenue or EPS until 2024, once proper monetization strategies are implemented. 

Investors need to remember that Shutterstock owns more than two-thirds of the market, so any attempts from the competition to take over are relatively futile. Now that the proper expenses are being raised, investors and analysts have more reasons than ever to consider purchasing this bottoming stock.