Cybersecurity, Business Apps, Medical Software: Recent IPOs Are Pulling Back With the Market

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Initial public offerings (IPOs) have been active lately as new technology companies come to market. Several names are pulling back along with the S&P 500 yesterday, which may create opportunities for investors.

Many of these companies are in fast-growing corners of the technology space. They focus on businesses like cybersecurity, cloud-based business software and health-care productivity. Investors may also find them interesting because they haven’t yet been added to major indexes like the S&P 500 or Nasdaq-100. That could make them less susceptible to volatility in the broader market.

This article uses the TradeStation platform to detect and analyze companies that joined public market in the last four months. It uses techniques and tools from our June educational session. In particular, we screened for companies with:

  • Less than 85 sessions of price history (roughly four months).
  • At least $10 billion of market capitalization.
  • Average stock volume of at least 100,000 shares per day

Below are some of the new companies that may be of interest.

Dlocal: Global Payments

Dlocal (DLO) went public for $21 on June 2. It was above the $16-18 range circulated by underwriters, which represents the strong demand. It jumped over $30 its first day of trading and ran as high as $73.43 on September 1.

DLO runs a payments system across developing countries like India, Vietnam, Brazil, Nigeria and Mexico. Its API- and cloud-based platform lets merchants accept payments from over 600 local systems, letting them widen their reach more easily and with less risk of fraud. The company also services global e-commerce giants like Amazon.com (AMZN) and Alphabet (GOOGL).

DLO’s debut earnings report on August 18 beat estimates. Revenue nearly tripled to $59 million, and beat forecasts by 45 percent. Total payment volumes increased by 319 percent and margins widened about 4 percentage points.

DLO gapped higher on those numbers and yesterday it pulled back to the lowest level since the report.

Analysts are looking for growth of more than 65 percent between 2021 and 2022.

Dlocal (DLO), daily chart, with 50-day moving average.

SentinelOne: AI-Powered Cybersecurity

SentinelOne (S) went public on June 29 for $35 a share, above the $31-32 price range. It jumped above $46 on its first day of trading and ran as high as $73.47 on September 7.

S uses artificial intelligence (AI) to detect and prevent cyberattacks. It successfully protected users from the Russian hacking of SolarWinds in December 2020, which compromised institutions including the U.S. government, Microsoft (MSFT), Intel (INTC) and Cisco Systems (CSCO).

The company’s inaugural earnings report on September 8 featured better-than-expected revenue and strong guidance. Profit missed consensus, which dragged the shares down to $60. They’ve remained above that level since.

Analysts expect S’s revenue to increase by more than 70 percent between 2021 and 2022.

Confluent: Data Management

Confluent (CFLT) went public on June 23 for $36, well above the $29-33 range. It jumped as high as $47 its first day of trading and peaked at $71 last week.

CFLT’s software helps enterprises manage data across multiple platforms and programs. It integrates with large cloud-based systems like Amazon.com’s (AMZN) AWS and used by large firms like Home Depot (HD).

CFLT’s debut earnings report on August 5 missed on the bottom line but revenue was 15 percent above forecasts. Analysts project growth of about 35 percent between 2021 and 2022.

Doximity: Mobile App for Doctors

Doximity (DOCS) went public on June 23 for $26, above the $20-23 range. It jumped as high as $53.98 its first day of trading and peaked at $107.79 on September 10.

DOCS lets doctors interact with patients and other caregivers over a mobile app. It helps with tasks like scheduling, communication and records management. The system has grown rapidly because physicians pay nothing to join, and revenue is generated from partnerships with health insurers and drug makers. It also benefited from activities shifting online during the coronavirus pandemic.

DOCS jumped to new highs on August 11 after its initial quarterly report beat across the board. Analysts see revenue increasing another 29 percent between 2021 and 2022.

Monday.com (MNDY), daily chart, with 50-day moving average.

Monday.com: Workflow Management

Monday.com (MNDY) went public on June 9 for $155, above the $125-140 range. It jumped as high as $182 its first day of trading and peaked at $425.84 on September 2.

MNDY’s cloud-based tools help organize workflows and teams. Managers can build complex systems without coding. The company has grown by offering solutions along business tasks like human resources, marketing and project management.

Revenue was about 14 percent above estimates when it first reported on August 17. Guidance was also 5-10 percent above consensus. Executives highlighted stickiness among large clients, noting that recurring revenue more than tripled with customers paying at least $50,000 a year.

Analysts see MNDY growing another 44 percent between 2021 and 2022.

As a side note, MNDY competes in some markets with these other relatively new companies:

  • Smartsheet (SMAR) is up 380 percent since its IPO in April 2018.
  • Asana (ASAN) is up 463 percent since its IPO in September 30.

Disclaimer: This article is for educational purposes only. None of the companies mentioned should be considered recommendations.

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