• If you are wondering whether Klaviyo is starting to look attractively priced or still carries too much risk, the key question is what you are really paying for at the current share price of US$19.53.
• The stock has recently been volatile, with a 13.3% gain over the last 7 days, a 13.4% decline over the last 30 days, and a 33.4% decline year to date, while the 1 year return stands at a 51.5% decline.
• These swings have kept Klaviyo on many investors' watchlists as they weigh up how the market is reassessing growth potential and risk. In that context, the focus has shifted to whether the current price fairly reflects the business fundamentals rather than short term sentiment.
• Right now, Klaviyo scores 5 out of 6 on our valuation checks for potential undervaluation, giving it a valuation score of 5. Next, we will look at how different valuation methods treat the stock before finishing with a more holistic way to think about what that number really means.

Find out why Klaviyo's -51.5% return over the last year is lagging behind its peers.

Approach 1: Klaviyo Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a business could be worth by projecting its future cash flows and then discounting those back to today’s dollars.

For Klaviyo, the model used is a 2 Stage Free Cash Flow to Equity approach. The company’s latest twelve month free cash flow is about US$194.3 million. Based on analyst inputs for the next few years, and then further projections by Simply Wall St out to 2035, free cash flow is projected to be US$434.2 million in 2030, with additional estimates continuing beyond that year.

All of those future cash flows, expressed in US dollars, are discounted back and summed to arrive at an estimated intrinsic value of US$26.32 per share. Compared with the current share price of US$19.53, this DCF suggests the stock trades at a 25.8% discount to that estimate. This indicates potential undervaluation on the basis of this model alone.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Klaviyo is undervalued by 25.8%. Track this in your watchlist or portfolio, or discover 49 more high quality undervalued stocks.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Klaviyo.

Approach 2: Klaviyo Price vs Sales

For growing, revenue focused software businesses, the P/S ratio is often more useful than P/E, especially when earnings are small or volatile. It compares what you pay per share with the sales the company is already generating.

What counts as a reasonable P/S depends on how quickly investors expect revenue to grow and how confident they are in the business model. Higher expected growth and lower perceived risk usually support a higher P/S, while slower growth or higher risk tend to pull that multiple down.

Klaviyo currently trades on a P/S of 4.82x. That sits above the broader Software industry average of 3.35x, but below the 11.43x peer average for companies in a similar space. Simply Wall St’s Fair Ratio for Klaviyo is 5.85x, which is its proprietary estimate of what the P/S could be given factors such as earnings growth, profit margins, industry, market cap and risk profile.

The Fair Ratio aims to be more tailored than a simple peer or industry comparison because it adjusts for the specific mix of growth, risks and profitability that apply to Klaviyo. With the Fair Ratio of 5.85x higher than the current 4.82x, this approach indicates that the shares may be undervalued on a P/S basis.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Klaviyo Narrative

Earlier we mentioned that there is an even better way to understand valuation. On Simply Wall St you can use Narratives, which are simple stories that tie your view of Klaviyo’s future revenue, earnings and margins to a financial forecast and fair value. You can then compare that fair value with today’s price to help you decide if the stock looks expensive or cheap. This is all available within an accessible tool on the Community page that updates automatically when new news or earnings arrive. For example, one investor might build a bullish Klaviyo Narrative around a Fair Value of about US$55.16 based on faster adoption of AI products and international expansion. Another might choose a more cautious Narrative with a Fair Value closer to US$32.19 that leans on slower product uptake and execution risk. You can see both side by side and decide which story and set of numbers you find more reasonable.

Do you think there's more to the story for Klaviyo? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

Disclaimer:This article represents the opinion of the author only. It does not represent the opinion of Webull, nor should it be viewed as an indication that Webull either agrees with or confirms the truthfulness or accuracy of the information. It should not be considered as investment advice from Webull or anyone else, nor should it be used as the basis of any investment decision.