UiPath has entered the robotic process automation scene with a magnificent roar, sending shockwaves to industry incumbents and future, potential rivals. But, can you buy stock in UiPath?
UiPath is venturing into a highly technical, speculative industry; however, robotic process automation capitalizes on operating leverage to deliver best-in-class profit margins.
UiPath is attempting to virtually do the impossible by cutting corporate cost/labor structures (lean organization structure), automate nearly any repetitive task, and create the 4th Industrial Revolution.
UiPath will be in fierce competition with other big names (Apple, Google, Microsoft, and OpenAI), but they are going to have the “first mover advantage”.
This creates great brand recognition and can build an impenetrable business moat.
UiPath has a complete business history and mission statement on their website (I recommend checking it out for more information).
“UiPath is the fastest-growing enterprise software company in history. Leader in every Gartner Magic Quadrant, Forrester Wave, and Everest Peak Matrix for RPA.
#1 in all Major Independent User Review sites for RPA including Gartner Peer Insights, GSCrowd, TrustRadius, Capterra, and ITCentralStation.
We see boundless potential in the way we live. It drives the way we work.
We take bold risks, always striving for humility so that we remain open to even greater possibilities.
We erase boundaries between ourselves and our customers through continuously shared learning and growth. Our successes aren’t merely linked, they’re inseparably fused.
We accelerate our efforts so that we can innovate and evolve with speed.
We are defined by diversity of all kinds, open in the way we listen, honest in the way we speak, voracious in our appetite for understanding unique viewpoints and experiences.
We believe in using the transformative power of automation to liberate the boundless potential of people.
It’s how we live. It’s how we accelerate human achievement.”
Robotic process automation is ushering in the 21st century economy, Big Data, and artificial intelligence. We will take a deeper dive below.
Robotic Process Automation (RPA)
McKinsey conducted an interview concerning the business prospects and technological feasibility of RPA.
“RPA takes the robot out of the human. The average knowledge worker employed on a back office process has a lot of repetitive, routine tasks that are dreary and uninteresting.
RPA is a type of software that mimics the activity of a human being in carrying out a task within a process.
It can do repetitive stuff more quickly, accurately, and tirelessly than humans, freeing them to do other tasks requiring human strengths such as emotional intelligence, reasoning, judgment, and interaction with the customer.
There are four streams of RPA. The first is a highly customized software that will work only with certain types of process in, say, accounting and finance.
The more general streams I describe in terms of a three lane motorway. The slow lane is what we call screen scraping or web scraping.
A user might be collecting data, synthesizing it, and putting it into some sort of document on a desktop. You automate as much of that as possible.
The second lane in terms of power is a self-development kit where a template is provided and specialist programmers design the robot. That’s usually customized for a specific organization.
The fast lane is enterprise/enterprise safe software that can be scaled and is reusable.”
RPA is incredibly scary, especially for any back-office, white collar employee at risk for having their job eliminated. Speaking from personal experience, my mother had her accounting role reduced due to RPA.
The rise in automation was seen as the prominent turning point for former presidential candidate, Andrew Yang.
Andrew wrote a tremendous book (regardless of political party) called “The War on Normal People” talking about automation eliminating work for “low-skilled workers”.
While many people joke (or are serious) about not liking their job, work provides fulfillment, meaning, and purpose. Without work, people slip into addiction and depression.
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Hence, the Opioid Crisis in hard-hit, manufacturing Rust Belt communities.
Corporate Social Responsibility (CSR)
This tremendously bleak outlook is why UiPath focuses so much on CSR. They realize while their product improves economic efficiency, they’re destroying a lot of people’s livelihoods.
“Corporate social responsibility (CSR) is a self-regulating business model that helps a company be socially accountable—to itself, its stakeholders, and the public.
By practicing corporate social responsibility, also called corporate citizenship, companies can be conscious of the kind of impact they are having on all aspects of society, including economic, social, and environmental.
To engage in CSR means that, in the ordinary course of business, a company is operating in ways that enhance society and the environment, instead of contributing negatively to them.
Corporate social responsibility is a broad concept that can take many forms depending on the company and industry.
Through CSR programs, philanthropy, and volunteer efforts, businesses can benefit society while boosting their brands.
As important as CSR is for the community, it is equally valuable for a company.”
UiPath Stock IPO
CNBC has been covering the latest updates for the UiPath stock IPO.
“Robotic process automation company UiPath on Thursday submitted a draft registration to the Securities and Exchange Commission for an initial public offering.
The company, which issued a release announcing the IPO registration, declined CNBC’s request for comment.
Founder and CEO Daniel Dines said in a July statement that…UiPath is “committed to working harder to help our customers evolve, transform, and succeed fast in the new normal.”
The UiPath IPO date has not been formally set; nonetheless; the firm’s executives have disclosed they have every intention to take UiPath public. I mean c’mon, just look at Snowflake and DoorDash!
UiPath Stock Price
CNBC subsequently covered the latest valuation for UiPath stock.
“The company, whose software automates back-office processes and time-consuming tasks for its clients, said on Monday that it raised $225 million at a valuation of $10.2 billion.
The round was led by Alkeon Capital Management, a tech-focused hedge fund that’s become one of the industry’s best performers this year by betting big on e-commerce retailers and work-from-home plays.
UiPath describes its technology as “robotic process automation.”
The company said its annual recurring revenue has increased to $400 million, up from about $100 million two years ago, with a big boost from large corporations that have been forced to quickly adapt to remote work.
Its valuation has climbed almost 50% since August, when it was valued at $7 billion.”
How do you even go about attempting to value a company lacking true industry peers, historic financial statements, and massive growth potential?
Well, in my personal opinion, the best option is starting with year-over-year sales growth. Fundamental valuation using a discounted cash flow model is not likely to suffice.
Taking a rough shot in the dark (based on the $10 billion valuation), I would expect public shares to float between $75-95 in the secondary trading market.
UiPath Stock Alternatives
Got it. You’re not sold on robotic process automation and profiting off reducing corporate head count. That makes total sense, but you’re still interested in other technology plays.
What are some alternative options?
Can You Buy Stock in UiPath?
At the moment, no, you cannot buy stock in UiPath, but you will be able to buy shares in an upcoming IPO. UiPath’s valuation points towards a $90 share price.
For next steps, I would keep an eye out for public financials, updated valuation models, sales growth, and other industry metrics needed for spotting a good investment.
UiPath, like Snowflake, could be the investment of a lifetime!
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