Well before the COVID-19 pandemic disrupted our business and commerce ecosystems, cloud computing was already sparking its own paradigm shift. By enabling enterprises to migrate their operational and storage demand channels to data server networks located off-premises, organizations of any size could effectively scale up their endeavors to match the business trajectory.
Sure enough, the global health crisis and its incentives for remote work drove demand for Couchbase, a cloud-driven database solutions provider, which facilitates modularity and rapid scaling for enterprise-level clients. Naturally, Couchbase’s relevant business sparked much interest for its initial public offering (IPO).
Couchbase Financial History
The global cloud computing market is a massive business that’s only getting bigger. According to MarketsandMarkets.com, this sector reached a value of $371.4 billion in 2020, which is a staggering sum. However, industry experts project that the segment will expand at a compound annual growth rate of 17.5% to $832.1 billion by 2025. For perspective, that’s more than the gross domestic product of the Netherlands.
You shouldn’t be surprised to learn that the Couchbase IPO was most hotly anticipated in terms of internet search queries. But the enthusiasm isn’t just centered on the debut itself but rather the company’s strong fundamentals. Attracting blue chip clients such as United Airlines (NASDAQ: UAL), Cisco Systems (NASDAQ: CSCO), Wells Fargo (NYSE: WFC) and Comcast (NASDAQ: CMCSA) among many others, Couchbase carries an enviable magnitude of credibility.
Most importantly, the underlying acumen transfers to robust financial growth. In the year ended Jan. 31, 2021, Couchbase generated revenue of $103.3 million, up 25% from 2019’s tally of $82.5 million. With the COVID-19 pandemic forcing a shutdown of nonessential activities, cloud-based solutions became all the rage. Encouragingly, Couchbase carried this momentum into 2021, with the quarter ended April 30, 2021, seeing revenue at nearly $30 million, up 21% from the year-ago quarter.
To be fair, not everything about the Couchbase IPO is a green light. Perhaps most glaringly, the company posted a net loss of nearly $40 million last year, which expanded from a loss of $29.3 million in 2019. Also, the red ink continues to accelerate, with the tech firm’s fiscal first-quarter net loss amounting to $14.6 million. At this rate, it will significantly trounce 2020 losses.
Still, the bottom line for prospective buyers could be Couchbase’s support among private equity firms. Since January 2009, the company has raised a total of $251 million.
To appreciate the true potential of Couchbase, interested investors should have a basic understanding of its core business. Focusing on distributed NoSQL cloud database services, the Couchbase platform steadily garnered a vast subscriber base thanks to its ability to help developers build applications quickly and deploy them to the market before their competitors do. The beauty of the Couchbase architecture lies in its NoSQL interface, which represents an advancement in application technology.
First, let’s define something. SQL stands for Structured Query Language, a protocol you use to access relational databases or data held in tables consisting of rows and columns. It’s called relational because search queries can link (or relate) data based on common attributes. In prior generations, programmers conducted their development models using relational databases because they efficiently organized data. At the time, computer storage commanded a hefty premium.
However, relational databases were cumbersome because programmers had to neatly arrange their work within said databases’ confines. Further, should a development model change significantly, it would require time-consuming modifications to the relational database. Imagine trying to post a lengthy statement on a social media platform that restricts your word count. You would have to spend time not only on formulating your thoughts but also on being as succinct as possible.
But with NoSQL databases, this innovation has no set structure, allowing programmers to essentially have free reign in their software development — it’s the social media platform mentioned above but without the restricting word count. This freedom provides incredible modularity, allowing Couchbase’s NoSQL application to stack and scale according to the demand requirements of the enterprise-level client.
How to Buy Couchbase (BASE) Stock
Almost always, financial advisors steer people who are new to the investing world toward stable blue-chip stocks for their greater predictability. These securities trade in the secondary market or what most people have in mind when they hear the term stock market. Usually, such assets are listed on major exchanges like the New York Stock Exchange or Nasdaq.
In contrast, an IPO is an example of a primary market transaction, which involves dealings of newly issued stocks. Regarding a traditional public market offer, the issuing company creates shares while underwriters find them a home, typically with institutional investors since they’re much more profitable than regular retail buyers.
In most cases, public investors must buy IPO shares at the open. While disadvantageous from a price perspective, public buyers have no obligation to participate in other IPOs if they don’t want to. Further, the process is easy. If you already know how to buy stocks, you can jump right in. If not, just follow the steps below. After the IPO’s debut, you can place market orders like you would with any other stock.
Step 1: Pick a brokerage.
People used to generally choose brokerages based on cost. With advanced technology improving access, most brokers have now standardized incentives such as commission-free trading. Instead, the deciding factor today is available features.
For example, some brokerages offer the ability to buy pre-IPO shares or new issues at their initial offering price. If IPOs are something you’d be interested in, you should consider platforms that provide the most access. After the IPO, you can use the broker that works best for you. Below is a list of the best brokers to choose from.
Step 2: Decide how many shares you want.
The share count is crucial as it determines your risk-reward profile, with higher counts leading to greater rewards but also exposure to more risk. Choose a balanced number that won’t keep you up at night if circumstances go awry.
Step 3: Choose your order type.
Before placing your order, familiarize yourself with these market concepts:
- Bid: The highest price a buyer will offer, the bid is always lower than the ask.
- Ask: The lowest price a seller will accept, the ask is always higher than the bid.
- Spread: The bid-ask price variance, the spread also signifies liquidity and risk. Narrower spreads suggest willingness to negotiate, thereby indicating higher liquidity and lower risk. The opposite is true for wider spreads.
- Limit order: A request for fulfillment at a specific price, limit orders offer full control but no execution guarantee.
- Market order: In contrast, a market order guarantees fulfillment at the prevailing rate but at unfavorable terms (like buy orders on the ask).
- Stop-loss order: Stop-loss orders are protective mechanisms to mitigate downside volatility. However, such orders will be fulfilled at either a predetermined price or any price lower than the requested rate.
- Stop-limit order: A stop-limit order only exits your holdings at a specific price, which can be rendered useless if the target stock keeps falling.
Step 4: Execute your trade.
To execute a market order, follow these steps:
- Select your action type (buy or sell).
- Enter the shares you want to acquire (or sell).
- Hit the Buy (or Sell) button.
Limit orders follow the same sequence, but you must also enter your desired execution price.
Modularity for a New Generation
With software innovations occurring at breakneck speeds, it’s never been more important to enhance developmental efficiencies. Through Couchbase’s cloud-driven NoSQL database application, enterprise clients enjoy modular end-to-end services from blueprinting to deployment. As well, the BASE stock is compelling because of the post-COVID paradigm of remote work.