Thanks to the rise of the on-demand economy, consumers have come to expect everything to be delivered quickly and conveniently, from content entertainment to even groceries. While the banking sector has long resisted change, it too must adapt to the changing landscape. Fortunately, Alkami Technology offers compelling cloud-based solutions to help banks and credit unions transition to this new consumer paradigm.
Below, you can learn more about Alkami Technology, a digital banking solutions provider that harnesses the power of digital transformation for financial institutions and improves the digital experience for the consumer.
Alkami Financial History
Software as a Service (SaaS) companies tend to generate strong revenue growth and Alkami Technology is no exception. According to its S-1 filing, the company posted top-line sales of $112.1 million in 2020, up 52.5% from the prior-year tally of $73.5 million. In 2018, Alkami rang up $48.2 million in revenue, demonstrating a clear upward sales trajectory.
Further, subscription revenue represented 93.7% of total sales last year. This metric also shows upward mobility, with the subscription mix being 91.5% in 2019 and 90.8% in 2018. On the other hand, prospective buyers of the Alkami IPO should note that the company posted net income losses over the last 3 years, with 2020 coming in at a net loss of $51.4 million.
Still, private investing groups showed their optimism for the SaaS banking specialist, with Alkami raising a total of $385.2 million over 10 funding rounds. Notably, on Sep. 29, 2020, it raised $140 million from lead investor D1 Capital Partners. While this could be a growth company, financial conditions could change at any time. For this reason, it’s better to review the price and trends related to this digital bank quite often to understand how your investment is performing.
Alkami Technology Potential
Though IPOs present substantial risks due to their lack of provenance, Alkami Technology offers speculators a potentially high-charging market debut. Even if you don’t buy shares on opening day, the company’s exceptional pertinence should facilitate longer-term positive returns.
First, the investing public descended upon software-based IPOs, making this one of the most subsectors within the IPO universe. Primarily, the popularity stems from SaaS firms’ core business model — they take existing physical computing infrastructure and deploy quick and convenient services through it.
Second, the banking sector desperately needs a digital makeover. Only about 70% of financial institutions use cloud-based computing solutions, which again confirms that this space resisted change. If that wasn’t bad enough, over 90% of the world’s top 100 banks use physical mainframe computers. Thanks to Alkami’s banking-centric SaaS platform, the company can help introduce our financial institutions to the current century.
Third, through innovations such as neobanks, a risk exists for the banking sector that consumers can leave traditional institutions in the dust. According to banking analysts, the global number of online and mobile banking users will breach 3.6 billion by 2024. Alkami helps connect banks with the necessary technology they need to better serve this new generation of clients.
How to Buy Alkami (ALKT) Stock
Generally speaking, retail investors have two choices regarding IPO participation. First, you can sign up for services that specialize in allowing everyday folks to buy pre-IPO shares. The benefit here is that you can take advantage of the so-called IPO pop or when a market debut surges higher based on intense interest. But the downside is that you never know what can happen on opening day or at any point up until the debut.
More commonly, retail investors choose to buy shares when they are first available to the public. In this case, if you already know how to buy stocks, the process is identical. If you don’t, just follow the easy steps below.
- Pick a brokerage.
Before you can participate in the Alkami IPO, you must first select a brokerage that you want to do business with. Thanks to the proliferation of mobile investment and trading apps, competition within the brokerage space tightened considerably. Now, with the industry standardizing incentives such as commission-free trading, you largely make your decision on personal preferences, lifestyle and investing ambition.
For instance, if you endure a daily hectic schedule and don’t have the time to monitor your portfolio regularly, then a mobile trading app may be just fine. On the other hand, if you anticipate developing your investing acumen, then you should choose a more robust platform.
- Decide how many shares you want.
Though a seemingly mundane step, you should give some thought to your share count acquisition. Logically, the more shares you own, the greater reward you will accrue if shares move higher. Of course, the opposite is also true, so you want to consider the potential volatility of your target stock.
Overall, the decision on how many shares to buy comes down to personal risk tolerance and account size. But whatever is the magic number for you, remember to write this figure down before you start trading. During the market session, several data points will likely bombard you, potentially causing you to make an emotional decision as opposed to a rational one.
Writing out your game plan helps keep out distractions and commit to your longer-term strategy.
- Choose your order type.
Unlike other transactions, stock prices constantly fluctuate during the session, necessitating different order types to fulfill your request. Further, you should be aware of these key concepts.
Bid: The bid is the highest price a buyer will offer for a stock. It is always lower than the ask.
Ask: In contrast, the ask is the lowest price that a seller will accept. It is always higher than the bid.
Spread: The bid-ask spread represents the difference between the bid and ask price. The spread is the profitability margin for market makers, who absorb some risk on their books as they acquire shares for the end goal of distribution to investors. It is also the de-factor indicator of market liquidity, with narrower spreads (low risk) indicating higher liquidity and wider spreads (high risk) indicating lower liquidity.
Limit order: For total control and transparency over your trades, choose a limit order. This order type only executes at a predetermined price. Keep in mind that no guarantee exists that your target stock will reach said price, potentially leaving your limit order hanging unfulfilled.
Market order: If you want guaranteed exposure to a particular stock, then you should choose a market order, which fulfills at the next available price. While handy, you should note that market orders execute at the least favorable rate — buy orders on the ask, sell orders on the bid.
Stop-loss order: To protect yourself against downside movements, you can deploy a stop-loss order on your holdings, which automatically exits you out of your position at either a predetermined price or the next available price. One of the biggest risks to stop losses is the gap-down session, where a stock opens at a much lower price than the prior session’s close. In this case, you will absorb a much steeper-than-anticipated exit.
Stop-limit order: To prevent the sometimes nasty surprises associated with stop losses, you can instead implement a stop-limit order, which only exits you out of your position at a predetermined price. However, if your target stock never reaches the specified threshold following a gap-down session, you could leave your stop limit hanging.
- Execute your trade.
To execute your trade, follow these steps for a market order:
Select your action type (buy or sell).
Enter the shares you want to acquire (or sell).
Hit the buy (or sell) button.
To place a limit order, the process is identical to the above, with the key exception that you must enter your desired execution price.
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Bringing Tech to a Staid Industry
Consumers everywhere want financial tools and services at their fingertips, catching many traditional banking institutions off guard with legacy infrastructures. Through its cloud-based SaaS platform, Alkami helps put banks on an even technological footing with its clients, fostering brand loyalty and inspiring new clients to join. Not surprisingly, the ALKT IPO is one of the most hotly anticipated.