The UiPath IPO was one of the largest in history - 23.9 million shares of UiPath stock sold for $1.34 billion in total, or $56 per share.
The April 21 initial public offering (IPO) was the third-largest U.S. software IPO ever behind the Qualtrics International Inc. (NASDAQ: XM) IPO at $1.5 billion and the Snowflake Inc. (NASDAQ: SNOW) IPO of $3.4 billion.
Shares soared to $80 within the first week of trading. As with many IPOs, UiPath stock tumbled back down over the following month. That's a 42% gain.
Then it went as low as $65.
Now, UiPath stock has popped 14% in a single day.
Knowing the time after IPOs can be volatile, investors have wondered when the time to buy UiPath would come.
Before we show you when to buy UiPath stock, here's what you should know about the company.
What Is UiPath?
UiPath is a Romanian company headquartered in New York City.
We're seeing an upspring of tech stocks that help make life more convenient for office workers in a new remote work era. UiPath meets worker needs using robots to automate repetitive tasks.
The software automates many of the tasks performed on customer relationship management (CRM) tools and other business software used enterprise-wide.
Technology like this comes especially handy in fields like legal services, financial services, or human resources. Really, any business with a lot of customers, or simply a lot of data, can benefit from what UiPath offers.
The company has been around since 2005. Before changing its name in 2015, it was called "DeskOver."
UiPath has had ample time to grow its market share prior to filing with the U.S. Securities and Exchange Commission for its IPO in December 2020.
In addition to its New York office, the company operates with thousands of employees in Bucharest, London, Bangalore, Paris, Singapore, and Washington, D.C.
You'll find shares of this company under the UiPath stock ticker "PATH."
The UiPath Financial Picture
The company made $607.6 million in revenue in 2020, which was up 81% from 2019.
UiPath is not profitable yet, but the revenue growth decreased the loss margin from a whopping $519.9 million to $92.4 million over the year.
Future growth potential also rests in the fact that UiPath has the highest gross margin of any software company out there, at 89%. That means its costs are significantly lower than its net sales revenue, so revenue is very likely to accelerate over time.
The company reports phenomenal customer retention at 145%. That's a crazy number, but it means it's lost virtually no customers. And if it has, the loss was cancelled out by upselling existing customers on the year.
The CEO currently owns 88% of the voting shares. It can be a good sign when the founder is still involved. It means leadership is still deeply invested in the company's product.
This, of course, has been reflected in the success UiPath has had with its product and finances. This is an incredibly healthy company with a sound business model.
That said, did UiPath choose the right time to IPO?
Tough Time for a UiPath IPO
Software IPOs like UiPath were all the rage back in 2020.
The pandemic forced everyone to function digitally. And it was even starting to look like a fast-track to the tech-heavy, robot-run society of everyone's dreams.
Thus, software companies appeared to do well in that time. The demand for digital productivity was expected to skyrocket.
Well, it still is, but probably not with the snap of a finger like many were hoping.
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The record speed of vaccinations and pushes to reopen economies has made tech investors a bit more realistic. Not as many are clamoring to start their online business, so fewer are looking for software solutions to streamline their lives than before.
While the Nasdaq climbed over 32% in the four months following the Snowflake IPO, it's fallen 6.2% in the last month and threatens to dip lower on a chip shortage and other bearish signs.
Even beyond tech, the broader market looks more bearish than it did late last year. We're seeing geopolitical concerns, pipeline hacks, and more threatening global supply chains.
All of this could put future technology hopes on the backburner for a while.
UiPath was certainly a mature company ready with a solid in-demand product. Here's whether that is enough to beat the odds.
When to Buy UiPath Stock
Given UiPath's latest 81% revenue growth and a cost structure that could easily squash the company's losses, UiPath is a sure value buy.
The next question, however, is when that buy should be executed.
You would have been happy to buy UiPath stock at its IPO and make out with 42%. But as IPOs go, many investors cleared out after that, and the stock dipped.
That's bound to happen, though. The main thing to focus on is this company brand and product, both of which are strong and could carry it in the long run.
That means, right now, you should probably buy the stock while it is low. It's already bounced a bit, and it could easily rebound past its all-time high so far.
The current $71 mark is still a great deal on a stock that could double or triple in five years.
Buy shares of UiPath as soon as you can, as long as it's under $80.
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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.