While dramatic improvements in technologies such as application programming interfaces (APIs) enabled smaller enterprises to compete with larger organizations, nothing changes without consequence. For the business world, the consumer experience (CX) became a vital component of success. Namely, customers expect more and it’s up to businesses to deliver or fade into irrelevance.
To prevent the latter from occurring, TaskUs entered the business process outsourcing (BPO) arena. Already a massive multibillion-dollar industry, BPO allows companies to hand off the CX element to a specialist. TaskUs is one of the best in the business, bringing excitement to this stock.
TaskUs Financial History
According to a Prudential (NYSE: PRU) survey, out of the 2,000 adults that the financial services firm surveyed, a massive 87% of respondents stated that they wanted to continue working from home, even after the threat of the COVID-19 pandemic fully subsides. Cynically, this may become a case of being careful what you wish for because you just might get it.
While most industries suffered catastrophic losses during the early onslaught of the public health crisis, the Business Process Outsourcing (BPO) market and specifically TaskUs went completely against the grain. Suddenly, companies across the business spectrum were looking for ways to manage their CX profile or to outsource the function altogether. That translated to reduced overhead for businesses and fresh opportunities for TaskUs to advertise its relevance.
Better yet, the company converted the sentiment lift for the BPO sector into excellent financial growth. In 2020, TaskUs generated service revenue of $478 million, up nearly 33% from 2019’s tally of $359.7 million. Also, the BPO firm posted net income of $34.5 million last year, up almost 2% from the $33.9 million earned in 2019. Significantly, 99% of TaskUs’ 2020 top-line sales came from recurring contracts.
It’s no surprise, then, that the BPO firm attracted plenty of interest from venture capitalists. Over 3 private funding rounds since June 2015, TaskUs raised a total of $279 million. In its last campaign on Aug. 9, 2018, TASK raised $250 million from lead investor Blackstone Group (NYSE: BX).
Well before the COVID-19 pandemic, TaskUs commanded serious upside potential. Because technology-based firms have become much more complicated and as CX demands collectively rose, enterprises found themselves outsourcing this function to 3rd-party service providers so that they could concentrate on their core business. Further, TaskUs’ financials demonstrate that it’s doing something right as most of its revenue stems from recurrent clients.
But the health crisis along with possible changes in the post-COVID business landscape could be the catalyst that sends TASK stock much higher than its projected IPO price. Based on industry experts, revenue in the BPO market may reach just under $299 billion by the end of 2021. Further, these experts believe that sector sales could expand at a compound annual growth rate of 6.26% between 2021 and 2025. This may result in a market volume of $381.2 billion by the range’s end.
As with any industry, competition represents a constant concern. Moreover, the very technological improvements that hoisted TaskUs into an enviable position in the BPO market could also undermine it later if the company doesn’t remain vigilant to new changes. Nevertheless, with a net revenue retention rate of 117% in 2020, TaskUs currently levers a dominant presence among BPO contenders.
As you know, life isn’t fair. This disparity is most evident with IPOs. If you want to buy shares at their initial offering price and well before they pop higher following their public debut, you must either be an institutional investor or a private buyer with deep pocketbooks.
Barring that, most public retail investors find themselves buying IPO shares at the open. However, this isn’t wholly disadvantageous. Mainly, you decide to participate in IPOs that you want without the pressure from underwriters to purchase everything that they’re selling.
How to Buy TaskUs Stock
If you know how to buy stocks, you can jump right in. If not, follow these simple steps.
Step 1: Pick a brokerage.
Thanks to the advent of mobile trading platforms and the subsequent competition, brokers offer similar incentives to join, such as commission-free trading. The benefit to you is that you can focus on a platform that suits your needs perfectly.
Below is a list of best brokers for your consideration.
Step 2: Decide how many shares you want.
Seemingly a mundane task, deciding your share count is incredibly important as it determines your risk-reward profile. The more shares you own of a particular stock, the more profitability you will accrue should it rise higher in value. However, the opposite is also true. Therefore, it’s important to save your high-share count wagers on your best investment ideas.
Above all, make sure you come up with your magic number prior to trading. You don’t want to let the emotions of an open session detract you from your well-reasoned strategy.
Step 3: Choose your order type.
Before diving in, take a minute to understand these market concepts:
- Bid: The bid is the highest price a buyer will offer. It is always lower than the ask.
- Ask: The ask is the lowest price that a seller will accept. It is always higher than the bid.
- Spread: The difference between the bid and ask price, the spread signals information about market liquidity and risk. Narrower spreads suggest higher liquidity and lower risk due to buyer availability, while the opposite conditions apply for wider spreads.
- Limit order: Trade stock at a specific price using limit orders. Though transparent, there’s no guarantee the market will fulfill them.
- Market order: To buy shares on the spot, place a market order, which executes at the next available price. The terms are least favorable to you: buy orders will execute on the ask while sell orders execute on the bid.
- Stop-loss order: A stop-loss order protects you through an automated exit at either a predetermined price or the next available price, whichever comes first. During a gap-down session, a stop-loss may fill below your predetermined price.
- Stop-limit order: A stop-limit order only fulfills at a predetermined price. But continued downside price action following a gap-down session will leave your stop-limit order hanging unfulfilled.
Step 4: Execute your trade.
To execute a market order, follow these steps:
- Select action type (buy or sell).
- Enter the shares you want to acquire (or sell).
- Hit the Buy (or Sell) button.
The limit order process is identical, except that you must input your desired execution price.
A Dominating Company in an Emerging Industry
One of the harsh lessons that the COVID-19 pandemic taught is that certain functions, especially those related to the consumer experience, can be outsourced. Moreover, with advancements in artificial intelligence, many of these functions don’t need to be operated by humans.
This is the inherent beauty of the TaskUs IPO. Leveraging various innovations, TaskUs performs the busy work that tech-based companies would rather hand off. Further, the BPO firm built a strong, trusting relationship with its clients, suggesting that it might even have an industry moat.