Image: Thoughtworks

You shouldn’t buy Thoughtworks Stock now, Here’s why!

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.

Image: Thoughtworks

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.