Contributor, Benzinga
October 13, 2022
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If business leaders had the opportunity to prevent the COVID-19 pandemic from materializing in the first place, arguably everyone would be on board. However, that doesn’t take away from the fact that certain sectors were able to turn lemons into lemonade. In particular, companies associated with e-commerce and digital sales, such as Braze stock, benefited tremendously as the global health crisis delivered a hostage audience.

In Q1 of 2020, e-commerce as a percentage of total retail sales amounted to 11.4%, a very healthy figure. But 1 quarter later, according to data from the U.S. Census Bureau, the metric jumped to 15.7%, an all-time record by a country mile. With such enthusiasm, you’d expect that digital marketing companies would have no trouble picking up clients.

Nevertheless, the pandemic sparked a kaleidoscope of aftershocks and consequences, one of which is the concept of retail revenge. Because government mandates forced millions of Americans to shelter in place, consumers contracted a bad case of cabin fever. Unexpectedly, then, physical commerce mediums gained relevance. And logically, this circumstance puts pressure on digitally levered enterprises to ramp up their marketing efforts.

Enter Braze, Inc., a cross-channel customer engagement platform that’s been delivering impressive returns on investment for its corporate clients. With its upcoming initial public offering (IPO), retail investors now have a chance to tag along for the journey.

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When Is the Braze IPO Date?

One of the biggest new offerings for the week beginning Nov. 15 was Braze as it entered the IPO calendar on Nov. 17. Pricing was confirmed one day earlier, allowing prospective investors some time to digest a heavily followed IPO.

On Oct. 22 of 2021, Braze filed its intention to become a public entity with the U.S. Securities and Exchange Commission (SEC). At the time, management provided an initial target to raise $100 million in the deal. But on Nov. 8, Braze substantially boosted its expectations, with plans to distribute 6.7 million shares at a price range between $55 and $60. At the highest end of the spectrum, Braze would raise $402 million, affording the firm a $5.4 billion valuation.

However, plans changed again, with Braze upsizing its deal to distribute 8 million shares at the same price range. Thus, at the midpoint, the customer engagement specialist would raise $460 million. Goldman Sachs (NYSE: GS), JPMorgan Chase & Co. (NYSE: JPM), Barclays (NYSE: BCS), Piper Sandler Companies (NYSE: PIPR) and William Blair represent the joint bookrunners for the IPO.

Shares trade on the Nasdaq exchange under the ticker symbol BRZE. Normally, Nasdaq-listed IPOs begin trading between 10 a.m. EST to 2 p.m. EST. It is currently trading at $29.49.

In terms of broader timing, Braze will enter the public arena at a unique time. On the positive front, demand for the core business should be strong, thus providing confidence toward anyone thinking about BRZE stock. Primarily, while the economy has done well clawing out of its spring 2020 doldrums, myriad challenges remain. With companies aggressively competing for consumer dollars, they need an edge — an attribute that Braze can readily provide.

On the other hand, The Wall Street Journal reported recently that cryptocurrency prices fell, in large part from the stronger dollar. Although virtual currencies have nothing to do per se with BRZE stock, expectations for rising inflation incentivizes spending as holding greenbacks becomes disadvantageous. But expectations for a stronger dollar creates the opposite incentive, which isn’t conducive for a consumer-centric marketing enterprise.

Braze Financial History

Among the crowning achievements of the information era is email. Suddenly, people could send messages to anyone to any part of the world as long as the recipient had internet access. In turn, the U.S. Postal Service incurred severe financial disruption, a matter which the federal agency is still struggling to overcome.

Despite the advantages and exponential conveniences of email, not everything about this innovation is pleasant for end-users. As a Yes Lifecycle Marketing survey revealed, while 47% of consumers rank email as their preferred channel of brand communications, over half (55%) “ignore marketing emails due to inbox overload.”

Interestingly, the survey also revealed that “in addition to inbox overload, subscribers ignore marketing emails because of irrelevant product recommendations (50 percent) and content (41 percent). The findings indicate that many retailers still fail to understand consumers' preferences in terms of mailing frequency, timing and content.”

At the same time, even though “consumers will ignore emails that fall short of their expectations, 42 percent reported that they don't unsubscribe from these communications; instead, they scan the subject lines to determine whether they'll open.” This last tidbit provides the catalyst for Braze’s growth potential.

As the company itself acknowledges, many of the failures of digital consumer outreaches stem from a combination of factors, including irrelevance, poor timing and a lack of cross-channel communications. Braze solves these challenges through proprietary mechanisms that allow its enterprise-level clients to better understand their customers’ needs and behaviors.

The ability to actually connect with consumers and drive long-lasting engagement is what separates Braze from competing firms, thus attracting high-level clients such as Domino’s Pizza Inc. (NYSE: DPZ), Intuit (NASDAQ: INTU) and Etsy Inc. (NASDAQ: ETSY).

Braze’s user growth translates to encouraging numbers on its financials. As of the second quarter 2022, the company generated revenue of $298,028.

On the not-so-pleasant end, however, total operating expenses jumped almost 36% to $127.8 million between fiscal years 2020 to 2021. Thus, net loss was largely unchanged between the 2 years, with 2021’s result coming in at $32 million.

Braze Potential

Although BRZE stock faces similar questions that dog IPOs of digital service platforms — namely the long-term profitability angle — the underlying company nevertheless commands serious potential. As mentioned earlier, Braze specializes in relevant marketing strategies that deliver strong ROI for its clients. Additionally, the economic backdrop suggests that demand for the core service will rise.

Physical retailers are competing with digital channels, thus necessitating companies tied to the latter to beef up their marketing strategies. Moreover, The strong dollar should not catch anyone off guard. Ever since the COVID-19 pandemic, money velocity (or the rate at which each unit of currency circulates throughout the economy) has failed to recover. Therefore, most consumers are not spending as much money as mainstream media reports suggest they are. While that’s a positive and a negative, it also means that Braze has a larger-than-expected potential addressable market.

But before you place a heavy order on BRZE stock, you should also realize that U.S.-based companies are collectively sitting on $11 trillion of debt. Termed a “pandemic hangover” by The Wall Street Journal, the weakness in the aggregate balance sheet implies that corporate leaders are not necessarily gung-ho about spending more, especially in light of the weaknesses in the consumer economy.

How to Buy Braze IPO (BRZE) Stock

Most retail investors must acquire shares at the open, which is easy if you know how to buy stocks. If not, just follow the steps below.

Step 1: Pick a brokerage.

In prior generations, brokerages varied significantly in terms of cost. Today, most feature identical incentives such as commission-free trading, enabling you to narrow your list of best brokers to platforms that provide attributes you care most about.

Step 2: Decide how many shares you want.

No matter what kind of IPO you’re dealing with, they’re all risky due to the uncertainties of the unknown. Therefore, choose a balanced share count to mitigate potential downside moves.

Step 3: Choose your order type.

Before trading, learn these market concepts.

  • Bid: The buyer’s best offer for a stock.
  • Ask: The seller’s lowest acceptable price.
  • Spread: The difference between the bid-ask price, the spread indicates market risk as this is also the profit margin for market makers.
  • Limit order: Buy or sell requests at a predetermined 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 leave positions at a specified price, but they also 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).

BRZE Restrictions for Retail Investors

Review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons before participating. Don’t trade stocks in which you have privileged (non-public) information.

An Engaging IPO That Cuts Both Ways

With the reopening of society, enterprises are eager to get an edge on the competition, thus lifting the case for BRZE stock. However, prospective buyers should be aware that the economy is far from recovered, which may mean bouts of volatility for those who take their chances with Braze’s IPO.

Q

Is Braze stock a good buy?

A

Many experts believe that Braze stock will go up in value. According to some Wall Street analysist, Braze’s share price could go up to $59.67 by September 13, 2023.

 

 

Q

How do I invest in Braze stock?

A

To invest in Braze stock, you must first choose a brokerage. Then, you should determine how many shares you want to purchase. Next, choose an order type and submit the order.

Q

What was the Braze IPO price?

A

The Braze IPO price was $65 a share.

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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.