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Should You Buy the Rubrik (RBRK) Stock IPO?

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Rubrik (NYSE:RBRK) — a data management software company that offers security solutions to major enterprises — just launched its initial public offering (IPO) today. Fundamentally, the Rubrik IPO serves as a real-time indicator regarding sustained sentiment for tech-centric new listings. Overall, RBRK stock could be a compelling speculative opportunity, although prospective buyers should recognize the risks.

According to Bloomberg, Rubrik initially planned to distribute 23 million shares for between $28 and $31 per share. However, management upped the initial offering price of the Rubrik IPO to $32 per share . The cloud and data security specialist also added 500,000 shares to the new listing, lifting the total amount raised from the IPO to $752 million.

At the IPO price, per Bloomberg, Rubrik would have “a market value of about $5.6 billion, based on the outstanding shares listed in its filings.” When factoring in stock options and restricted share units, the firm’s fully diluted valuation comes out to more than $6.6 billion.

Notably, tech stalwart Microsoft (NASDAQ:MSFT) is a major backer of Rubrik. The company made an equity investment into the data security company in 2021. That funding cycle pushed RBRK’s valuation to $4 billion, making the software firm a “unicorn” prior to the Rubrik IPO.

All Eyes Are on the Rubrik IPO as a Sentiment Gauge for New Listings

While the Rubrik IPO has not been as popular as the Reddit (NYSE:RDDT) IPO earlier this year, it should still serve as a litmus test regarding the sustained interest for new listings. As Fast Company notes, encouraging signs exist when it comes to the U.S. IPO market:

“Although the number of public offerings in the first quarter of 2024 was similar to the same quarter a year ago, the deals were larger. EY reports that proceeds for the period tripled, with seven deals raising more than $500 million, compared to only one deal during the first quarter of 2023.”

Bloomberg corroborates this optimistic backdrop for new listings. “Since the beginning of the year, companies have raised more than $12.2 billion on US exchanges, more than twice as much as in the same period in 2023,” reported the outlet. Bloomberg added that “two dozen offerings over $100 million were completed this year, spanning sectors from sporting goods to safety testing.”

Should You Buy RBRK Stock?

On one hand, RBRK stock is compelling because of the data security angle. Increasingly, both individuals and enterprises are finding the internet to be a treacherous place. Last year, Clorox (NYSE:CLX) made news due to a cyberattack that caused significant financial harm. Therefore, many businesses are likely still looking for systems to protect themselves.

On the other hand, though, Rubrik disclosed a net loss of $354 million for the fiscal year ended Jan. 31. That’s despite growing its subscription-based revenue by 47%. Of course, it’s not unusual for tech firms to post red ink. But investors may want to consider the broader economic environment and projected sentiment for risk-on assets before making a decision to buy RBRK stock.

On the date of publication, Josh Enomoto did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.

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