UiPath Analysis
Chart done on hourly timeframe. UiPath shares are trading near their all time lows after the company’s most recent earnings sent the stock sliding down. The technology company’s IPO was just a few years ago and it started off great, but like most IPOs from 2020-2021, PATH has given up the majority of its market value as reality set in. Those years of high liquidity and low interest rates inflated many stock valuations, UiPath in specific was trading at a market cap around 50B at one point, but that number became harder to justify for a company who was at the time generating less than $1B in annual revenue.
Since then, PATH has declined to a much more reasonable range, but investors are still fearful of the stock because all it seems to do is come down. Being a tech stock trading near its all time lows in an environment where tech stocks are booming makes the trust even harder to form. However if we look outside investor sentiment and just focus on the numbers, PATH has actually done a great job at growing their annual revenue. The company grew revenue at an average of 20% YoY in 2022 and 2023, and has gotten closer to positive net income, but not quite there yet. Their balance sheet has a 3:1 positive ratio between assets and liabilities, and free cash flow is around 325M TTM. So all in all, for a small company, PATH is improving and could start gaining attention soon, but that depends on its ability to regain investor confidence.
The company’s most recent announcement to restore their original founder as CEO was seen as a bad sign and acted as the catalyst behind the earnings drop, but it may be just what the company needs to restore buyers. After all, founders often make great CEOs because of their passion and familiarity with the field, so the transition may hurt in the short term, but be the change they need in the long run.
All in all, PATH has entered an attractive valuation range and if they continue what they’re doing, then they’ll likely gain Wall Street’s positive attention again. This is one to ease into quarter over quarter as new earnings and forecasts come out.