The RPA software company has seen a sharp decline since last year’s IPO
UiPath, the Romania-based software company specializing in robotic process automation (RPA) has been on a steady decline since it hit the markets on 21 April 2021. The stock, which had returned -59.8% YTD, fell a further 4% on Tuesday.
UiPath made its debut on the NYSE at $56 per share and was trading at $17.34 as markets closed this Tuesday. With initial market capitalization as high as $40 billion, the current figure of $9.45 billion shows just how far the stock has fallen.
A few factors for this dramatic fall can be identified at a glance. The financial performance is struggling to back growth projections. UiPath reported annual revenue of $892 million, while net loss increased to $525 million. This marks a revenue increase of 47% YoY.
Rising inflation and recession fears also play into UiPath’s fall massively. Investors are looking to cut losses and find value during the worst-performing first half of the year in half a century. Interest rate hikes initiated by the Federal Reserve have not done enough to curb fears. Some analysts are expecting a recession to reach the US somewhere in 2023.
The company has been actively seeking new partners since the start of 2022. They have recently partnered up with the Japanese Sumitomo Mitsui Trust Bank. The partnership aims to save labor hours and improve critical business operations. The bank has reportedly automated 250 core operations using UiPath Orchestrator – the company’s automated workflow management solution.
Cathie Wood’s $20 million UiPath bet not paying off in the short term
Cathie Wood’s ARK Innovation ETF added 867,331 shares to its portfolio of 18.5 million UiPath shares. The stock was trading just below $23 per share at the time, hence the investment lost roughly 25% of its initial value.
Despite the short-term underperformance, Cathie Wood maintains a positive outlook on UiPath and management’s ability to improve the company’s bottom line.
Cowen analyst Brian Bergin shares Cathie Wood’s optimism, expecting the stock to outperform with a price target of $27. Bergin also praised UiPath for reducing staff, seeing it as the right step towards profitable growth.