Here's Whether Bentley Systems Stock Is a Buy

Another promising software company just went public today (Sept. 23). The Bentley Systems stock price jumped 41% after its IPO.

Bentley Systems shares climbed as high as $31 from their pre-IPO range of $19-21 per share. That range was already an upgrade from yesterday's $17-19 per share.

The company raised $236.5 million with its IPO.

Today, we're going to talk about what makes Bentley Systems unique, and whether it's a buy or not moving forward.

Here are some things you might want to know before you invest in this company...

What Is Bentley Systems?

Bentley Systems is a software development company. But it's fairly niche compared to other recent software IPOs like Snowflake and JFrog.

This company makes software specifically to support infrastructure management. That is, many people responsible for managing roadways, bridges, and airports may rely on Bentley Systems to do their jobs.

Bentley offers an open platform for engineers, architects, and really anyone working in a technical capacity on a construction project to collaborate. The software integrates different jobs with applications specific to their needs.

One of its highlights recently was the OpenGround Cloud, which helps construction teams plan every aspect of a dig at a particular site. Without OpenGround, these projects would require rapid manual planning and organizing, but this application enables managers to keep track of all of that in one place.

This company may have an advantage, being in such a niche market.

Here's how it fares in the industry...

Bentley Has Stiff Competition in Cloud Computing

Bentley Systems has three major competitors already public: Autodesk Inc. (NASDAQ: ADSK), Trimble Inc. (NASDAQ: TRMB), and Dassault Systems (OTCPK: DASTY).

Bentley Systems operates in 171 countries in addition to the United States. The company's annual revenue comes in around $700 million.

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Compared to its competitors, this company might have a way to go. Autodesk and Trimble are both now above $3 billion in annual revenue. Dassault Systems is above $4 billion.

All three of those companies have net income above $300 million as well.

If Bentley Systems is going to join them in profitability, it will need to establish itself firmly in the infrastructure management software market with its products.

It's still up in the air whether it can do this. But that is besides the point of whether you should buy the stock right now...

Is Bentley Systems Stock a Buy?

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Before you invest in Bentley Systems, you need to realize that IPO investing can be risky business.

Lots can happen before and after an IPO. Analysts will raise their targets, buyers will rush in, the price will go up... but the price can always go back down.

In fact, IPOs are often followed by a crash. It can be gradual or immediate, depending on the stock.

Even the Snowflake IPO, the biggest software IPO of all time, lost more than 8% in its first week of trading. It dipped as low as $226 from its initial $276.

Of course, Snowflake is an example of a successful IPO. A stock could also go the Lyft Inc. (NASDAQ: LYFT) route and lose 65% steadily since its IPO.

Lyft has been driven down primarily due to competition from Uber Inc. (NASDAQ: UBER). The companies have been engaged in a price war, and they have been drilled even further by the COVID-19 pandemic.

Unfortunately, Bentley Systems has more in common with Lyft than Snowflake at this point.

The company has less than half the bottom line of its competitors. Though it's a longstanding company, founded in the early '80s, cloud computing and new data solutions create a new playing field for it and its competitors.

Bentley will have to work hard to claim a spot in a new data-driven tech world. No one is counting it out in the long run, but it would be smart to hold off buying until the pre-IPO hype simmers down.

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About the Author

Mike Stenger, Associate Editor for Money Morning at Money Map Press, graduated from the Perdue School of Business at Salisbury University. He has combined his degree in Economics with an interest in emerging technologies by finding where tech and finance overlap. Today, he studies the cybersecurity sector, AI, streaming, and the Cloud.

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