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Braze stock is going public, and with 56% year-over-year growth from 2020 to 2021, and many investors are taking notice.
According to the terms they set on Nov. 8, they’re valued at about $5.2 billion and aim to raise $402 million during the IPO.
For those who want in on the action, Braze will be listed on the Robinhood IPO access platform and the Nasdaq Exchange under the ticker symbol “BRZE.” Their promising growth will intrigue investors, so now is the time to consider whether you plan to buy.
By 2026, experts expect the global customer communications management (CCM) market size to reach $2.2 billion. That’s a Compound Annual Growth Rate (CAGR) of +11.2% from 2021. In other words, the number of potential customers for Braze’s platform will only increase over time.
With the public listing for Braze looming closer, start deciding now whether this buy is for you. Here’s everything you need to know:
What Is Braze Inc.?
With Braze’s multi-functional platform, businesses can form powerful connections with their customers through a smooth and intuitive customer experience. Likewise, customers get to interact with businesses in a way that is most convenient to them.
Along with the essential marketing tools, Braze features data analysis functionality to help dig deep into the customer’s mind. In such a saturated industry, additions like this make all the difference.
So far, Braze claims to have saved customers 2,200 hours on marketing and communication tasks. This is a sign that the company is providing real value, since time is everything to a growing enterprise.
Co-founded in 2011 in New York, Braze features a winning management team, including CEO Bill Magnuson and Product Team Lead Kevin Wang. Impressively, Wang’s leadership has seen the company revenue grow by over $150 million since stepping into the role in February 2020.
And apparently, the claims ring true, as Forrester Research Inc. recognized Braze as a leader in mobile engagement automation. The criteria for this award includes product vision, innovation, and performance, so this was no small feat.
Their impressive impact doesn't stop there, though. Existing customers love the platform, some even naming it the “best marketing automation tool [they’ve] ever used.” Braze currently serves over 1,000 customers worldwide.
That all sounds great, but it isn’t a reliable indication of whether you should buy this IPO stock.
Is Braze Profitable?
The short answer? No.
For long-term investors, Braze promises high rewards, but whether or not the IPO will be profitable is a different story.
Investors have lost money, with earnings per share (EPS) sitting at -$.50 for the last 12 months. It’s normal for new tech companies to struggle in their first few years, but without high-impact strategy changes, this company doesn’t stand a chance.
They could turn things around in the future based on their global reach, promising leadership, and increasing revenue. You should keep a close eye on stock market predictions in the next few weeks.
It’s easy to get mesmerized by impressive wins, but keep in mind that Braze is still technically in the red. While the Braze IPO has an estimated valuation of $5.2 billion, the company has seen a -$45.34 million overall net income. Net Income Per Employee (NIPE) sits at -$52, 115. This means that their main source of production is draining all their money.
They also had losses reaching -$37.97 million in 2020, rising by .50% from the year before. While their revenue has increased by 55.86% in that same time, growth indicators aren’t yet stable enough to promise that revenue will continue to increase faster than costs do. This poses a larger initial risk than you might be willing to take on.
In addition, the Braze IPO prospectus fully outlines all the risk factors that investors should be aware of.
Says the company, “we expect that our annual revenue growth rate will decline in the future as a result of a variety of factors, including the maturation of our business.”
They go on to point out many other potential threats, including the following:
- Growing operational costs could permanently hinder their profitability.
- If growth strategies aren’t effective and time-efficient, operational costs could continue to rise.
- It’s still relying primarily on equity financing, instead of net profit.
Risks are just a part of the game, and most investors bet on potential over profitability anyway. But here’s how you can seize the opportunity for bigger gains.
You Should Buy Braze Stock After the IPO
Choosing the right trading strategies can be the difference between turning a profit or losing big.
That’s why waiting to buy Braze stock after the IPO makes the most sense, even though it’s available on Robinhood.
Take Uber, for example. The wildly popular ridesharing app had a rocky start when its first day of trading saw a 7.6% drop in share prices. IPO investors watched as their stock in the company continued to lose value, and Uber’s initial valuation estimate of $120 billion slid down to $8.1 billion on the NYSE.
This turn of events was so shocking that experts now credit Uber with shifting investor sentiment back to profitability, where it rightly belongs. This change in approach prompted people to look at the stock market with more realism and set a standard for assessing stock value.
Unlike Uber IPO investors, you should be realistic and look past the initial buzz. Braze needs to drastically minimize its operational costs, but its current records reveal the opposite of that.
If aftermarket performance reflects the company’s net income history, shares will become cheaper. We recommend playing the long game by buying Braze stock after the IPO if shares come down, similar to Uber’s.
This gives you the opportunity to buy more stock for much less.
This company has the bones to be a solid long-term moneymaker. Waiting it out could mean you own more shares when the company does become profitable.
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