Thoughtworks (TWKS) had a successful stock market launch on September 15th. The stock has increased by more than 40% from its IPO price of $21. Market players are eager to learn more about the TWKS stock projection and if they should purchase the stock now, given the high level of demand.
Thoughtworks specializes in digital consulting and software development. The firm raised $344 million in its first public offering (IPO) by selling 16.4 million shares.
Thoughtworks Stock is on a rise
On its Nasdaq launch, Thoughtworks shares soared roughly 24%, valuing the firm at around $9 billion. The stock began trading at $26, up from the $21 IPO price. This was more than the $18–$20 target price range set by the firm. Investors are bullish on Thoughtworks’ growth potential, which is why the stock is rising.
Thoughtworks is profitable
Thoughtworks made $79.3 million in net income in 2020, up from $28.4 million in 2019. In 2020, sales increased 4% year over year to $803.4 million, while in the first half of 2021, revenue increased 24% year over year to $498.1 million.
The firm has total liabilities of $983.4 million and cash and cash equivalents of $216 million as of June 30, 2021.
What happens after IPO?
Businesses have long struggled to stay current with technological advancements. As a consequence, they’ve always turned to consultants for help. During the COVID-19 lockdowns, the necessity for technology experts was never more obvious. People required digital methods to interact and do business.
According to a 2021 research by 360 Industry Updates, the worldwide digital transformation strategy consulting market, which was valued at $58.2 billion in 2019, is expected to grow to $143 billion by 2025.
Long-term, Thoughtworks is an excellent investment.
Thoughtworks is a digital transformation consulting firm that works with businesses all around the world. The firm assists businesses in making the transition from on-premises, legacy systems to cloud-based platforms with complex architectures. It employs approximately 9,000 people and operates in 17 countries as of June. Thoughtworks is going public at a time when, in the wake of the COVID-19 epidemic, organizations are rapidly digitizing their operations.
The stock of Thoughtworks is an excellent investment, but not at the current price.
Thoughtworks has a $9.1 billion market value. In the 12 months ending June 30, the firm made $901 million in sales. ThoughtWorks trailing price-to-sales multiple is 10.1x based on its market value.
Thoughtworks competes against well-established companies such as Cognizant Technology Solutions and Accenture, despite being in a high-growth industry with a large number of its own employees. Accenture and Cognizant are selling at 3.8x and 2.1x NTM EV-to-sales multiples, respectively.
Overall, owning Thoughtworks stock makes sense as the initial exuberance fades and the stock achieves a more realistic valuation.