WAs the stock market as a whole hits all-time highs, many tech stocks have been hammered in 2021. Despite this sharp decline in the number of tech companies, many companies are enjoying strong operational success. Stock prices are falling, but these companies continue to increase their sales and establish their leadership in their respective sectors.
Both UiPath (NYSE: PATH) and Twilio (NYSE: TWLO) are in this boat. Actions of both technological actions fell 35% and nearly 30%, respectively, despite strong business growth. With big markets ahead of them, I think today’s prices might be the optimal buying opportunities to get these innovative stocks cheaply.
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1. UiPath: bringing AI to the business
We’ve all done something so tedious and repetitive at work that we wish we could just magically finish it. It is, after all, a huge waste of time because we prefer to work on more engaging and thoughtful work. With powered by artificial intelligence virtual bots, UiPath turns our wishes into orders.
The company offers automation software that can mimic a human by understanding what’s on a screen, extracting data, and making critical decisions. However, this software can do this much faster than humans, making 58% fewer errors. UiPath uses robotic process automation (RPA) in tandem with humans to make businesses more efficient. With UiPath, real workers are not made redundant or eliminated, but rather free to work on more critical tasks. UiPath has saved some of its customers millions of hours and dollars, which is why over 9,600 customers are using UiPath and are currently spending 44% more than a year ago.
The stock has not declined due to poor operational performance. The company has achieved sales of $ 602.5 million so far this year, which is 50% more than a year ago. Stocks fell on the significant rise in the company’s net loss. In the third quarter, the company lost nearly $ 123 million, more than the total net loss for the first nine months of 2020. This is because UiPath quickly increased its ad spend, as well as research. and development.
This is not without reason, however. The company predicts that its addressable market will nearly double to $ 30 billion by 2024. UiPath is already the industry leader in RPA, according to GartnerMagic Quadrant, but the company is ramping up spending to make sure competitors like Automation Anywhere don’t beat them. With the RPA market growing so rapidly over the next few years, UiPath is now spending – quite successfully – on gaining brand recognition as the industry begins to explode.
Here’s the gist: UiPath is the leader of a futuristic industry that is expected to grow rapidly over the next several years. With so much investment to capture that growth, as well as a dominant product that has caught the attention of NASA and Alphabet, I think today’s stock prices are a gift to long-term investors.
2. Twilio: victim of the sale of technology
With over 250,000 businesses using Twilio, most of us have used its technology without even recognizing it. Anyone who has ever contacted a food delivery driver or Lyft driver used Twilio’s services without knowing it. The company helps other businesses communicate within apps, making it easier for consumers and businesses to connect. These services appear to have become even more important to Twilio users, as they now spend 31% more today than a year ago with the company.
Twilio posted year-over-year revenue growth of 65% in the third quarter, but in part due to its acquisitions. Although the company has always been able to show impressive organic growth, which most growth-by-acquisition companies lack. In the third quarter, the company’s revenue improved by 38% year-over-year organically, and it was able to organically increase its revenue by 34% or more than one year over the next in the last nine quarters.
Shares were largely sent lower in 2021, and Twilio’s major net losses didn’t help. The company lost $ 224 million in the third quarter, including nearly $ 170 million in stock-based compensation. While it may be worrisome today, it’s overshadowed by the impressive revenue growth the company is seeing, both organically and inorganically, in this lucrative market. At 17 times the sells, this stock is trading at levels not seen since mid-2020, leaving an opportunistic window for investors.
The use of in-app communication is only going to spread as the world continues to adopt these habits, and Twilio has likely benefited from it and will likely continue to benefit from it. The future of Twilio is bright, which is why I think investors should consider taking advantage of these low stock prices today.
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Suzanne Frey, an executive at Alphabet, is a member of the board of directors of The Motley Fool. Jamie Louko owns Twilio. The Motley Fool owns and recommends Alphabet (A-shares), Alphabet (C-shares), Twilio, and UiPath Inc. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.