AvidXchange (AVDX) Stock

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Contributor, Benzinga
October 11, 2021
$11.64
-0.48[-3.96%]
Last update: 4:04PM (Delayed 15-Minutes)
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Open11.910Close11.640
Vol / Avg.1.030M / 1.791MMkt Cap2.378B
Day Range11.515 - 11.91052 Wk Range6.880 - 13.560

It’s probably not what most (if any) worker bees want to hear. But following the unprecedented devastation of a once-in-a-century public health crisis, the captain is calling for all hands on deck. True, the mass-scale work-from-home initiative proved resoundingly successful in a legitimate do-or-die situation. But with various economic headwinds — particularly inflation, geopolitical tensions and the growing wealth gap — crashing into the hull of the U.S. economy, businesses need to operate at full capacity.

As a recent op-ed from The Washington Post stated, remote operations can’t deliver effective training nor foster camaraderie: “in-person work fosters innovation, the effects of which on productivity almost certainly exceed the gains from working harder at home for possibly unsustainable stretches. An even slightly higher growth rate once people return to offices will quickly outpace the one-time gain from saved commuting time.”

But while the cubicle may spark innovative ideas, the drag of paperwork will continue to be a curse to management unless a solution is found. This fact segues into AvidXchange, a midmarket vendor and payment automation services provider that’s already imparting a rethink on costly administrative duties. Therefore, interest is sky-high for this cloud-based platform’s initial public offering (IPO).

When is the AvidXchange IPO Date?

Because of the Delta variant of the SARS-CoV-2 virus and the volatile nature of the COVID-19 pandemic, no one knows for sure when a full transition back to the office will happen. For instance, some workforce experts believe that the great migration back to the watercooler and fantasy football pools will occur in spring of 2022. Regardless, the evidence suggests companies of all sizes will recall employees.

But the restoration of capacity is particularly important for midmarket employers or companies that are larger than small businesses but smaller than industry stalwarts. At the same time, these mid-tier enterprises absorb significant costs associated with handling various administrative duties. Because they lack the human capital of the largest institutions, higher-skilled, higher-salaried employees must often drag their efficiencies, stymieing the bottom line.

And that’s the beauty of the AvidXchange IPO, which theoretically allows investors to participate in the issuing company’s accretive ambitions for midmarket businesses. According to a Reuters report, the cloud-based workflow solutions provider filed its public offering prospectus with the U.S. Securities and Exchange Commission (SEC) on Oct. 4, 2021.

Per the details of the IPO, AvidXchange’s management team will offer 22 million shares with an expected price range between $23 and $25 per unit. At the top of the estimate spectrum, the company will raise $550 million, a tally that would see the firm command a valuation of approximately $4.78 billion.

Should everything go according to plan, AvidXchange will ink its debut on the IPO calendar on Oct. 13. Shares will trade on the Nasdaq exchange under the ticker symbol AVDX. Typically, new issues listed on the technology-centric exchange will begin trading between 10 a.m. EST to 2 p.m. EST.

As you would expect from a public market debut commanding a nominally rich premium, several major financial institutions are running the books on the deal, which are Goldman Sachs (NYSE: GS), JPMorgan Chase (NYSE: JPM), Bank of America (NYSE: BAC), Barclays (NYSE: BCS), Credit Suisse (NYSE: CS), KeyCorp (NYSE: KEY), Deutsche Bank (NYSE: DB), Piper Sandler (NYSE: PIPR), Nomura (NYSE: NMR) and Fifth Third Bancorp (NASDAQ: FITB).

AvidXchange Financial History

You’ve got to have money to make money, at least as the commonly cited adage goes. While such truisms don’t always apply so neatly in all business cases, for AVDX stock, these are words to live by.

Per the Reuters report, billionaire entrepreneur and venture capitalist Peter Thiel backs AvidXchange, a not insignificant fact. Indeed, this status alone has likely helped the company rack up significant funding to the tune of $1.1 billion over 10 private equity financing rounds. At the end of April 2020, when AvidXchange had raised roughly $906 million to that point, the business enjoyed a valuation of $2 billion.

Therefore, should the IPO go off as intended, the financial technology (fintech) firm will have more than doubled its valuation over an approximately year-and-a-half period. Further, with the COVID-19 crisis accelerating the digital transformation that was already well in play prior to the pandemic, AVDX stock could reasonably rise higher without being excessively overvalued relative to the fundamentals of the new normal.

Financial information listed on the underlying company’s Form S-1 indicates a potentially lucrative opportunity at play. In 2020, AvidXchange generated revenue of $185.9 million in 2020, representing annual growth of 24.3% over 2019’s sales tally of $149.6 million. Moreover, a gross profit of $85.4 million in 2020 — translating to a year-over-year lift of 36% — resulted in an increase of gross margin to 45.9% last year from 41.9% in 2019.

Better yet, positive momentum has carried over into the present year. For the 6 months ending June 30, AvidXchange posted revenue of just under $114 million, an over 33% gain from the year-ago period’s total of $85.5 million. Such print bodes well for anyone interested in acquiring AVDX stock.

Still, investors ought to note the financial risks. In 2019, net loss for AvidXchange was $93.5 million. In 2020, this red ink expanded to $101.2 million. And in the half-year period ending June 2021, net loss amounted to $92 million, a staggeringly unfavorable comparison to a loss of $50.6 million 1 year prior.

AvidXchange Potential

As employers look to fill their cubicles with actual human beings as opposed to their digital reflections, the need for greater efficiencies could not be any more pertinent. Remember, several organizations lost at least a month’s worth of revenue and, in other cases, several quarters’ worth of operations. You can’t just bounce back immediately from this magnitude of collective loss.

Nevertheless, businesses will do whatever possible to make up lost ground. Further, with the bulk of middle class America losing a significant share of total net wealth during the COVID-19 crisis, several industries may also be suffering from a deflated addressable market. Such terrible circumstances only heighten the pressure, perhaps incentivizing a cutthroat environment.

But if midmarket companies still want to keep their integrity, then AvidXchange offers a compelling solution. It’s not just about helping process invoices and other pieces of paperwork that has institutional investors excited about AVDX stock. Instead, the underlying company frees up their greatest-value and highest-impact employees to perform activities that are net accretive to the business.

In many ways, AVDX stock is fundamentally a 2-for-1 deal, with AvidXchange primarily handling cumbersome administrative duties and secondarily allowing its enterprise-level clients’ most valuable human assets to perform the tasks that are central to operations.

How to Buy AvidXchange IPO (AVDX) Stock

For most traditional IPOs, retail investors must buy shares at the open, after underwriters have doled out the soon-to-be-public company’s equity units to their choicest clients, almost always institutional investors like mutual funds.

On the positive side, the process of acquiring shares on launch day is very easy if you already know how to buy stocks. If not, just follow the simple steps below.

Step 1: Pick a brokerage.

Serious participants of public market debuts should narrow their list of best brokers to platforms that facilitate pre-IPO access or the ability to purchase new issues at their initial offering price. Be aware that you may need to apply ahead of time for the privilege.

Step 2: Decide how many shares you want.

Given the extreme volatility and unpredictability of IPOs, use a balanced share count so that you don’t end up putting all your eggs in 1 basket.

Step 3: Choose your order type.

Before placing your first order, understand these market concepts.

  • Bid: The buyer’s best offer.
  • Ask: The seller’s lowest acceptable price.
  • Spread: The variance between the bid-ask price, the spread denotes market risk as this is also the profit margin for market makers. Narrower spreads imply greater volume and therefore lower risk while broader spreads indicate a low-volume, high-risk environment.
  • Limit order: Buy or sell requests at a specific price, limit orders provide transparency but no execution guarantees.
  • Market order: Market orders guarantee fulfillment but only at the current rate.
  • Stop-loss order: Stop-loss orders automatically exit your position at either a predetermined price or anything lower.
  • Stop-limit order: Stop-limit orders only exit positions at a specified price, but they carry non-fulfillment risks.

Step 4: Execute your trade.

Follow these steps to execute a market order:

  1. Select your action type (buy or sell).
  2. Enter the shares you want to acquire (or sell).
  3. Hit the Buy (or Sell) button.

Follow the same sequence for limit orders (but include your execution price).

AVDX Restrictions for Retail Investors

Review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons regarding potential conflicts of interest. In short, securities laws clamp down on those trading on privileged information.

AVDX Pre-IPO

For traditional new offerings, companies like ClickIPO help democratize this rarefied process by distributing shares of select enterprises with public ambitions to regular retail investors. Those interested in developing their IPO acumen should consider opening an account.

Changing the Efficiency Game

Though a midmarket enterprise has more resources than its small-business counterparts, it still must focus heavily on personnel management to expand its operations. AvidXchange helps level the playing field with industry blue chips by automating several cumbersome administrative duties. In the post-pandemic era, the value of this innovation could lift AVDX stock to even greater plateaus.

About Joshua Enomoto

His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.