Prepare for the the UiPath IPO — here's why investors should be cautious... - The Average Joe

    Prepare for the the UiPath IPO — here’s why investors should be cautious…

    Victor Lei — Head of Research

    March 31, 2021

    UiPath IPO

    March 31, 2021

    Don’t believe them. The robots are coming and UiPath, the office automation software provider, is leading this change. On Mar. 26, UIPath filed for what could be another blockbuster IPO but here’s why you might want to wait on the UiPath IPO…

    Meet your new coworker — UiPath

    Founded in 2005, UiPath (originally DeskOver) went through multiple near-death experiences and product iterations before seeing massive success. UiPath is a provider of robotics processing automation (RPA) software — which automates repetitive digital office tasks like data entry or filing forms.

    After its pivot to RPA, UiPath took off like a rocket — and so did the RPA space. In 5 years, UiPath went from a 10 employee company to a $35b company. Its upcoming IPO follows a record year:

    • Sales grew 81% to $607m in 2020
    • Cut its losses from $520m to $92m in 2020, a fifth of what it was losing in 2019

    COVID accelerated the demand for automation tools and for UiPath’s customers, 2020 was all about cutting costs.

    UiPath IPO: How big is the RPA market? According to Gartner’s research… 

    • $1.4B market size in 2019 (up 63% from 2018) and was expected to grow 12% to $1.6b in 2020
    • 90% of large organizations will have adopted RPA in some form by 2022

    What does this mean? Growth in this industry is already slowing which leaves UiPath with 2 options: sell more to existing customers or expand into other markets.

    While UiPath is one of the largest in the RPA space, alongside Automation Anywhere and Blue Prism (LON: PRSM), competition is heating up…

    • ServiceNow ($NOW), a $95b cloud computing software provider, entered the RPA market with its acquisition of Intellibot in Mar. 2021.
    • SAP ($SAP) and Microsoft ($MSFT) also entered the RPA space with new product launches and acquisitions in 2021.

    For investors… Blockbuster IPO, tragic returns

    2021 hasn’t been kind to big-name IPOs and the UiPath IPO comes at an unfortunate time in the market. Two of the largest IPOs of 2020, Snowflake ($SNOW) and DoorDash ($DASH), are down over 10% and 30% since their first-day trading price.

    These big-name tech stocks were part of the recent sell-off in the tech sector, which has been largely out of favor with investors. So before you invest in the futuristic promises of automation, ask yourself — is this the right time?

    Should you invest in the UiPath IPO? In many cases, investors are often better off waiting 4-7 months after a company goes public. See why.

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