Off to the races

I’m talking about Trustpilot (LSE:TRST). The stock is up 25% in the past month, although still down 39% over a broader one-year time horizon.

There are two main reasons for the jump in recent weeks. One is the continuation of a recovery from the sharp fall late last year. The slump came about due to a short-seller report from Grizzly Research that criticised the company. Trustpilot rejected the claims made, and since then, confidence has returned. This is being reflected by the share price moving back higher.

Another factor is continued momentum from the release of the 2025 full-year results. These impressed investors, with bookings up 22%. All geographical regions reported double-digit percentage growth, showing that performance isn’t just being driven by one area. Strong demand for subscription products was also noted. This is good because it provides stickier revenue going forward.

Bucking the trend

The strong move recently versus the broad market is very telling. It shows that, even amid the shock to investor sentiment right now, Trustpilot is a stock people don’t want to sell. At a more fundamental level, the company has very little exposure to the conflict in the Middle East. Therefore, even if the situation gets worse, I struggle to see how the business will be impacted in a bad way.

Looking further out, I think there are plenty of reasons to be positive. The latest report showed growth in large enterprise clients, which is a huge opportunity going forward. Trustpilot is increasingly targeting these larger enterprise clients, which pay significantly more than small businesses.

In terms of AI, some are worried this could present a risk. Interestingly, AI search tools often pull information from review platforms. I believe Trustpilot could benefit from greater visibility for AI-generated answers and product recommendations. Put another way, AI could help the firm, not be a threat.

Caution needed

The stock is down heavily over the past year, highlighting the risk of high volatility in growth stocks. Ultimately, this is a feature of growth companies and can’t really be avoided. Further, it’s facing competition from the big tech giants like Alphabet and Amazon, both of which are pushing their own review platforms more. This could eat away at market share in the coming years.

Despite these risks, I believe the company is doing very well, as the move in recent weeks shows. Therefore, I think it’s a stock for investors to consider.

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In the first few weeks of the year, this FTSE 250 growth stock’s seen its share price climb by roughly 32.5%, transforming a £20,000 initial investment into a chunky £26,500!

What happened? And should investors be rushing to invest in this software-as-a-service (SaaS) enterprise before it’s too late?

Strong technology returns

The UK stock market doesn’t have many tech enterprises that typically prefer listing their shares in the US. And since its IPO in 2021, Trustpilot shares haven’t exactly been a stellar performer. But that seems to be changing.

Earlier this month, management provided investors with a trading update about the group’s performance throughout the whole of 2025. And despite being targeted by a scathing short-seller report late last year, the results absolutely smashed past analysts’ forecasts across almost every metric.

Total bookings are up 22% to $291m, its annual recurring revenue expanded by 28% to $296m, with total revenue growth landing at 24%, well ahead of the 18% the experts were expecting. To top things off, while specific earnings figures weren’t given, management confirmed that profits are also on track to beat the $37m forecast from institutional investors.

This surprise growth’s being driven by a variety of factors. But most notably, the company’s seeing a faster-than-anticipated rise in new business and enterprise accounts, along with more customers adopting the recently-introduced suite of AI tools.

So combining better-than-expected results, a depressed valuation triggered by an earlier short-seller report, and the announcement to extend its ongoing share buyback programme by £10m, it isn’t surprising to see Trustpilot shares charge ahead.

What could go wrong?

When it comes to reputation management, Trustpilot’s the global leader with an estimated 51.6% market share, dwarfing rivals such as Hootsuite (8.1%) and Yotpo (7.9%).

This scale’s a critical advantage, giving access to data and insights that its rivals simply don’t have. And it could explain why the firm’s AI tools are seemingly becoming so popular with new and existing customers to tackle tasks like fraud detection, answer engine optimisation, and ChatGPT integration.

 However, that doesn’t make it a risk-free investment.

Management claims it’s removing millions of fake reviews from its platform. Nevertheless, allegations of allowing fake reviews on paying customer accounts are still seemingly on the rise. In fact, this was a central piece of last year’s short-seller report, which accused the company of mafia-like practices.

While such allegations are likely exaggerated, it nonetheless creates significant reputational risks. And for a business that relies on consumer trust, the perception of allowing inauthentic reviews onto its platform could create enormous opportunities for competitors while potentially attracting the attention of regulators.

The bottom line

Trustpilot’s recent share price surge is being driven by genuine operational improvement rather than pure speculation. But with the stock now trading at a forward price-to-earnings ratio of almost 50, the shares are far from cheap.

Personally, while I think it’s definitely a business worth watching, I believe there are far better growth opportunities within the FTSE 250 to explore today.

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But as painful as these losses undoubtedly are, the best buying opportunities are often among the stocks that have suffered a massive downturn. Just take a look at what happened to Rolls-Royce shares over the last five years.

So what happened to these businesses? And is now the time to think about buying?

What’s going on with Trustpilot shares?

2025’s been quite a volatile year for the software-as-a-service online reviewing platform. Despite posting strong financial results, concerns have been mounting about the platform’s reliance on a small number of key customers and seemingly lacklustre conversion rates.

Despite management’s efforts, around 97% of businesses on Trustpilot have a free account and don’t pay for a subscription to the service’s various tools for marketing and analytics. This bearish sentiment has since been sent into overdrive following a short-seller report published earlier this month.

The report accuses Trustpilot of “mafia-style” practices, facilitating fake reviews to extort non-subscription users, and ultimately trading its integrity for money. Trustpilot, of course, denies all of these allegations. But with sentiment surrounding its monetisation already a bit shaky, the report unsurprisingly caused many investors to jump ship.

What about Trainline?

Much like Trustpilot, Trainline’s latest financials have also been relatively strong. In the six months leading to August, net ticket sales jumped 8%, while operating profits charged ahead by 38% reaching £68m, thanks to successful cost-cutting efforts.

Yet, once again, it’s external forces sending the stock price in the wrong direction.

The chief concern surrounds the government’s Great British Railways plan to introduce a state-backed, commission-free ticketing platform. That’s a direct threat to Trainline’s business model, undercutting both its profit margins and competitive moat in a single move.

Needless to say, this new policy risk adds a lot of uncertainty even in the long run, with experts cutting share price targets and downgrading their recommendations to Hold.

A buying opportunity?

Taking a contrarian stance on high-quality companies impacted by short-term challenges is a proven recipe for tasty stock market returns. And looking at these two FTSE shares, there’s still a lot to like, especially since the recent sell-offs have dragged their valuations to much more attractive levels.

But out of the two, Trustpilot looks like the more interesting prospect, in my mind. While troubling, it’s important to remember that short seller reports are almost always exaggerated, and several inaccuracies have already been identified.

Subsequently, while the shares are still down, it has nonetheless already jumped back more than 23% since the report was published. Given the group’s solid fundamentals and the stock market’s propensity to overreact, I think the FTSE stock deserves a closer look.

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Could there be an opportunity here after such a sharp fall?

Short seller report

It fell after short seller research firm Grizzly Research published a scathing report on the company. It accused Trustpilot of creating fake profiles that gave negative reviews and then pressuring companies to pay for subscriptions, removing genuine negative reviews of its subscribers, allowing paid-for fake positive reviews to thrive, and more.

“We believe that the public will increasingly wake up to the fact that Trustpilot has traded the integrity of reviews for revenues. We see this resulting in a rapid depreciation of the Trustpilot brand and its fundamental value proposition.”
Grizzly Research

Grizzly believes that once the depth of these issues is understood the Trustpilot website is likely to see less visibility on Google. This will be the “nail in coffin” for the company, it believes.

Trustpilot’s reply

On Friday, Trustpilot put out a statement categorically rejecting the allegations made by Grizzly Research. “Their report contains factual inaccuracies and false claims, which were intended to adversely impact the company’s share price,” it said in the statement.

It went on to say that Grizzly Research’s report is built on a “basic misunderstanding” of the company’s business model and ignores publicly available information about its scale, policies, data, and enforcement. It added that it’s considering all appropriate options in response to “demonstrably false statements”.

My view

Short sellers like Grizzly Research get a bad rap, but I think they have a place in the market.

They tend to do their research. And they can help regular investors identify risky stocks, whether the risk is related to a high valuation, a sketchy management team, or a flawed business model.

Grizzly Research has a pretty good track record when it comes to identifying risky stocks. In the past, it has produced reports on lots of stocks that have gone on to fall 80%+.

In terms of its Trustpilot report, I went through this over the weekend and it’s pretty alarming. It highlights fake profiles on Trustpilot using stock image photos and leaving good reviews (see below).

It also highlights how some companies that have really bad reviews on Reddit have unusually high ratings. An example here is freecash.com, which has a 4.8/5 review, despite shocking reviews on Reddit.

Overall, the report left me with a less positive view of Trustpilot.

“Trustpilot seems to be most appreciated by companies who run sketchy business models. Many companies that are already shut down due to fraud are somehow still extremely highly rated on Trustpilot.”
Grizzly Research

Better investment opportunities?

Short seller research firms don’t always get it right. Sometimes, their negative views can be off the mark and Grizzly could be wrong here.

Of course, Grizzly has an active short position, so the report should be taken with a healthy dose of scepticism, until anything might be proved.

Yet I I think investors should consider avoiding Trustpilot shares until we know more.

If someone is looking for growth, there are better opportunities in the market today, in my view.

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While the stock’s enjoyed a bit of a rally in recent weeks, since 2025, investors have seen close to 15% of their investment wiped out. And those who didn’t buy in until February, this loss is closer to 30%. And yet, despite the downward trajectory, analyst consensus remains very positive.

As of 15 May, six of the eight institutional investors tracking this enterprise have issued a Buy or Outperform rating. And one in particular, Berenberg Bank, has even issued a share price target of 420p. That’s roughly 70% ahead of where the shares are trading today. And if this projection proves accurate, then adding Trustpilot to a portfolio right now could be a lucrative move.

The bull case

Berenberg’s conviction surrounding Trustpilot has been steadily increasing since March 2023. Initially, the investment group issued a forecast of 160p. This was later raised to 270p by September 2024, before landing at 330p in January this year and then finally boosted to 420p in March.

Each target hike was triggered by different reasons. But a common theme has been a steady stream of impressive results. In 2024, the company beat analyst expectations with sales growing 19% to $210.7m and operating profits swinging from a $0.6m loss to a $3.8m profit.

At the same time, net dollar retention rate surpassed the all-important 100% threshold, indicating that existing customers ramped up their spending. And when combined with higher bookings, the groups’ operating cash flow surged by 41%, reaching $29.4m.

This isn’t the first time Trustpilot’s surpassed expectations. And with management guiding for even more double-digit growth in 2025 along with margin expansion, it’s easy to see why Berenburg’s bullish.

The bear case

As impressive as Trustpilot’s performance has been lately, like every investment there are some key risks to consider. The most prominent is the company’s indirect sensitivity to the macroeconomic landscape.

Since its Review Management & Analytics platform isn’t a mission-critical expense for many of its customers, it’s often subject to customer spending cuts when economic conditions worsen. This problem’s only exacerbated by the fact that the bulk of its customer base consists of small- and medium-sized companies that are typically far more sensitive to economic shocks.

In fact, this threat is why Berenburg has previously cut its share price target for Trustpilot in early 2023.

The bottom line

Overall, Berenburg’s optimism doesn’t appear to be misplaced. Trustpilot has its weaknesses. But the highly cash generative nature of its operations and subsequent cash-rich balance sheet give the firm some financial flexibility during downturns.

Having said that, a quick glance at the group’s forward price-to-earnings ratio of 85 quickly reveals that future growth’s already been baked into the current share price. And with such a lofty valuation, volatility’s almost guaranteed if the company hits a small speed bump.

Nevertheless, quality businesses often demand a premium. And in the case of Trustpilot, a closer look seems warranted in my eyes.

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Factors at play

Last week, the 2024 annual results came out. Trustpilot reported its first annual pre-tax profit of £5.2m. Despite this positive milestone, the market reacted negatively because some investors had higher expectations. When looking to the future, the business expects revenue growth percentage for 2025 in the high teens. Given that revenue grew by 19% for 2024, some would have been disappointed that this is seen as a slower rate of growth.

Another factor is broader market uncertainty. Concerns about the impact of President Trump’s tariffs and economic growth in the UK have made the UK stock market volatile. In these scenarios, growth stocks like Trustpilot often fall more than value stocks or defensive shares.

A dip worth considering

Despite these reasons, I think there’s good potential for the stock to recover in coming months. Even though the results didn’t quite meet the high expectations some had, it was a really solid set of earnings. The fact that the company has flipped to being profitable is a big milestone that bodes well going forward.

The CEO spoke about how it was a year “delivering record bookings, profitability and cash generation”. For the year ahead, he noted, “we will continue to deliver product innovation to embed trust across commerce, as trust becomes even more important in the age of AI”.

I think the last point is important. Trustpilot should see continued demand from users wanting to get clarity on companies using AI and which ones are trustworthy. AI can sometimes be smoke and mirrors, making it harder to spot potential scams. Trustpilot can help to clear the murkiness in this area, and I believe this could be a source of growth for the company.

High growth potential

A risk going forward is that investor expectations might still be too high. So even if the company announces a new product, partnership, or trading update, it might not be enough to excite people. Yet I think that the size of the drop in the past week likely resets some of the optimism. I’d struggle to see it fall another 18% in the coming week on this basis.

Putting everything together, I’m seriously thinking about buying the stock shortly for my portfolio. It has a unique business model that’s clearly doing very well. With growth in the UK, Europe, and America, it’s well set to scale further in the coming year and beyond.

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One of my favourite sectors of the industry is storage. It’s known to be reliably less prone to recessionary pressures, and one company in particular has caught my eye recently.

UK’s storage leader

Big Yellow Group (LSE:BYG) has lots going for it in my opinion. First of all, consider that its share price has risen over 100% in 10 years. What’s more, it has managed to pull this off with reliably low volatility. That’s rare for companies that pay good dividends. Often, high dividend yields come at the expense of share price growth. Not with this company. Thankfully, I might be able to get the best of both worlds over the long term.

Now I’ve shown the price is on the rise, what about the dividends? Well, Big Yellow has a generous yield of over 4%. While that’s not the highest in the real estate industry, as yields in the sector typically hover around 7%, I think it’s still excellent considering the share price growth I outlined above.

In fact, my preference is that I’d rather have a growing asset value and good dividends than a stagnant asset value with excellent dividends. If a share price isn’t growing, it might be on its way down soon instead.

Is the company good, though?

Assessing price and dividends is all well and good. But the real value of a business comes from its operations. I’ve studied Big Yellow Group for a while now, and I find it very impressive. The firm has 109 locations around the UK, and it’s continuously expanding. I reckon many readers have seen or are customers of the company already. I find myself thinking, with the company’s 4.8-star customer reviews on Trustpilot, maybe the shares are worth the same. After all, it’s customer satisfaction that will drive up the investment price over the long term.

Real estate risks

While it’s clear I love this firm, investing in real estate comes with some risks. For example, all of Big Yellow’s property is in the UK. That means that if there were a housing market crash where the price of properties in the country significantly fell, Big Yellow would be highly vulnerable to losses in asset value. This would negatively impact its balance sheet and likely also affect its income from rents due to changes in rental price expectations from customers.

That’s why I think I’ll hold the firm in my portfolio as part of a well diversified investment strategy. I don’t want all my assets in real estate, nor all in UK revenue streams. But a portion of my money invested in British storage property seems wise and prudent.

Right now, I’m almost certain I’ll buy a stake in this company soon.

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Sometimes, I like to take on a little more risk with a newer company that offers higher growth prospects. I think Trustpilot (LSE:TRST) could perform quite well.

My perspective on the business model

I’ve used the services many times before, and I think it does one of the best jobs at reviewing businesses in a user-friendly fashion.

The company structures itself around a freemium model. Businesses can get many of the benefits of Trustpilot for free, but when they want to take their marketing efforts and brand recognition to the next level through Trustpilot, they are introduced to a subscription fee for advanced features.

However, it faces a lot of competition. For example, Yelp, Google Reviews, TripAdvisor, and Facebook Reviews all vie for a share of the online review market. Other than the fact that it has built a trusted platform with the public, I think that well-financed upstarts could replicate what it is doing quite easily, even potentially improving upon it.

Lasting profitability is on the horizon

This is a younger company. So, investors can’t expect its financials to look as stable as those of more time-tested peers. Trustpilot had its initial public offering in just 2021.

Given that it’s common for newer firms to be operating at a loss for some time, I’ve been pleased to notice that last year, it reported profitability for the first time since going public.

It’s Trustpilot’s immense growth that has given it room to drive home some earnings recently. In fact, the last annual report mentioned that between 2017 and 2022, the company had achieved 40% compound annual growth in total cumulative reviews and 23% compound annual growth in annual recurring revenue.

With it delivering growth like that and hinting at lasting profitability on the horizon, I’m slightly tempted to invest in the company.

Trustpilot has to navigate technology changes

One of the largest issues that could arise if I invest in Trustpilot is how search engine algorithms change.

At the moment, business websites that show customer ratings, like those provided by Trustpilot, tend to appear higher in Google search results. As you can imagine, this makes services like Trustpilot even more valuable to companies that want good search engine optimisation. So, if the algorithms change, which may happen with the advent of AI driving new demand for information gathering, Trustpilot could see a slowdown in growth.

It’s on my watchlist

This is a company that deserves to be on my watchlist. I think that its future is very bright.

However, as I mentioned, I’m not sure how unique its offering is. I prefer to invest in really hard-to-replicate inventions that I believe will stand the test of time.

I think what Trustpilot is offering is quite simple, which can also make for a great company. But I don’t expect it to be one of the best-performing investments in the world. It’s simply not groundbreaking enough. That’s why I’m staying on the sidelines for now.

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What the experts think

Most top banks and brokers have research teams that study stocks and put out their own share price forecasts. Most are set with a 12-month time horizon.

Several analysts have been scrambling to keep up with the performance of Trustpilot over the past year. For example, the team at JP Morgan had a target price of 140p this time last year. This was increased to 190p late last year and is now at 250p. This suggests further gains could be possible for the company.

Another case is Peel Hunt. This time last year the forecast was set at 165p. It was increased at the start of this year to 200p but has been raised again following the 2023 results from March. The current forecast is 250p.

In fact, from all of the share price forecasts that I can see, no major bank or broker has a target below 190p (which is roughly where the stock currently trades).

Fundamental positives

I don’t want to simply buy a stock because it has a lot of positive forecasts out there. These are just price predictions and have no guarantee of being correct. That’s why I have to take them with a pinch of salt.

With that being said, if my view agrees with other investors out there, it’s a big tick in the box when considering whether or not to buy.

My positive view on the stock is based around the fact that the firm has successfully reached a big pivot point. This is the fact that after years of losses, it posted a $7.1m profit for 2023.

The business has been steadily growing revenue for years, but operating costs prevented it from getting to a profit after tax. However, it has now reached a point whereby revenue is enough to cover this. Continued growth in site traffic has helped here. For example, monthly unique users on the platform rose 30% versus 2022.

Points to remember

Even though I think the stock could outperform over the coming year, I’m slightly cautious. Of course, any stock that has risen so much in such a short period of time has the potential to ‘correct’ lower as investors look to bank some profit.

I’m also aware that there’s a cap on how large Trustpilot can be in the current form. A review site is a good business idea, but it’s not going to be the next member of the trillion-dollar market cap club!

Even with these risks, I’m seriously considering adding it to my portfolio and feel investors should consider doing the same.

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Details moving the share price

So far today (20 March), the largest faller in the FTSE 250 index is Trustpilot Group (LSE:TRST). It’s down 9.8% following a share placement announcement.

In short, private placements can be done by either the company selling new shares to a group of investors, or with an existing shareholder selling a bulk load of existing shares.

In this case, Vitruvian Partners sold a bulk of 15.5m existing shares at a discounted price of 200p in a private placement. As a result, the reaction to the private placement was that the share price fell to compensate somewhat.

However, in the long term, the expectation is that if the company continues to focus on core business operations, the share price should rally higher.

Trustpilot won’t receive any proceeds of the placement, as the sale was of existing shares.

Focusing on growth

Even though new investors will focus on the sharp drop today, it’s not really anything I see to worry about. It’s true that Trustpilot has been running at a loss for several years. In fact, it only flipped to making a profit in the last year.

However, the recent pivot to profit allows the business to organically help keep growth going. Although I don’t know exactly how retained earnings will be used, there are signs from the latest annual report. It spoke of how the firm “continued to invest in innovation to improve our platform. By doing so, we drove retention, new business, upsell, and further consumer engagement”.

I think further investment into tech, artificial intelligence, and development will be key areas to put more money towards in 2024 and beyond.

Given the solid set of financial results, I think the business will be able to continue to use it’s own funds in the future for new investment. Although this might mean investors looking for dividends could be disappointed, I think it should help to boost the share price going forward.

One for the future

The main risk I see with the business is that it’s quite concentrated in the offering. Aside from being a review platform, it doesn’t really have any meaningful other operations that can help to grow revenue. Right now that might not be a huge problem, but I think it will have to think outside the box for spinoff ideas as it gets larger.

Putting it all together, the 123% share price gain over the past year certainly puts the business on the map. I’m not worried about the blip today, and am considering buying the stock for further growth.

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