What Investors Are Missing About Vimeo’s Potential

After a long slump, software stocks have gotten a lift from the market euphoria that has followed Donald Trump’s election. The exuberance has even spread to companies that sell video creation and distribution tools, such as Vimeo, despite the very real threat hanging over their business models: artificial intelligence–powered video tools.

Shares of Vimeo have risen 40% over the past month, compared with the 22% uptick in the WisdomTree Cloud Computing Fund, which tracks a broad basket of software companies. Even so, the stock is still well down from its high of around $52 a few years ago and is trading at just 1.9 times next year’s revenue, a sign that investors aren’t enthusiastic about its future.