As any sailor will tell you, the Earth has no shortage of water. According to the Bureau of Reclamation website, water covers about 71% of this planet’s surface. At the same time, 97% of this precious resource is found in the oceans, meaning that it’s too salty for drinking, crop growing and most industrial uses.
This cruel irony — water surrounds civilizations yet humanity at large suffers from a water crisis — also extends to the digitalization of global economies. Truly, people today have no shortage of data. According to a Statista.com report, the “total amount of data created, captured, copied and consumed globally is forecast to increase rapidly, reaching 64.2 zettabytes in 2020.” And by 2025, global data creation could reach more than 180 zettabytes.
However, how much of this data is actually useful or actionable? Without meaningful insights, the vast data stream is simply noise, much like the ocean is relative to land-based lifeforms’ consumption needs. But that’s where Informatica arrives front and center stage. Thanks to the enterprise cloud data management provider’s holistic solutions for large-scale business needs, its upcoming initial public offering (IPO) should prove intriguing.
When Is the Informatica IPO Date?
With businesses of all sizes increasingly relying on data to manage workflows, develop best practices from post-mortem analyses and navigate an ideal course of action through choppy waters, cloud management and data analytics have become indelible attributes in modern economies.
However, it’s not just financial matters that positively affect the inclusion of Informatica in the IPO calendar. If you’ve watched a baseball game in the past few years, you’ll know that sports analysts have access to an array of statistical insights measuring average performance capabilities under specific gameday situations.
Therefore, big data isn’t just a mechanism to rise from the gray cubicle to the corner office. Rather, you can make the argument that the U.S. and developed nations are fermenting data-driven cultures. That could be a huge leg up for the Informatica IPO.
On Oct. 1, 2021, the enterprise software developer filed its intention to go public with the U.S. Securities and Exchange Commission (SEC). This is the first time Informatica is returning to the capital market after a 6-year absence following a $5.3 billion deal to take the company private, according to a Reuters report.
Later, on Oct. 18, management disclosed the terms of its IPO, which will involve the distribution of 29 million shares with an expected price range between $29 and $32 per unit. At the highest end of the estimated spectrum, Informatica could raise $928 million in gross proceeds before factoring out expenses related to the offering. Additionally, the terms also imply that the software firm could command a valuation of $8.76 billion.
Informatica shares will trade on the New York Stock Exchange under the ticker symbol INFA. Goldman Sachs Group Inc. (NYSE: GS) and JPMorgan Chase & Co. (NYSE: JPM) represent the lead underwriters for the offering. The IPO date is scheduled for Oct. 27, 2021.
The reintroduction of INFA stock to the equities market comes at an interesting juncture. As another Reuters report from June 15 of this year noted, U.S. IPOs hit an annual record in less than 6 months. At the same time, the IPO market has not produced the same gains that benchmark indices have, suggesting investors should adopt a cautionary approach.
Informatica Financial History
In terms of financial credibility, Informatica benefits from a massive, multi-tiered total addressable market. Primarily, the global enterprise data management sector reached a valuation of approximately $77.9 billion in 2020. Per analysis from MarketsAndMarkets.com, industry experts peg a $122.9 billion target by 2025, representing a compound annual growth rate (CAGR) of 9.5% during the forecast period.
Prospective investors of INFA stock see similar figures from Grand View Research, which note that 2020’s valuation of the global enterprise data management market was $72.79 billion. By the end of this year, it anticipates the sector to hit $84.58 billion and in 2028, industry revenue should ring up $208.87 billion.
However, data management is a catch-all phrase that only describes 1 component of Informatica’s wide and diverse solutions. For instance, insiders predict that the global big data and business analytics (BDA) market will reach $215.7 billion by the end of this year. As well, the global artificial intelligence market — another specialty tied to INFA stock — will likely hit $93.5 billion by the end of 2021.
Specifically regarding Informatica’s financials, prospective buyers will take encouragement at the software firm’s resilience during the pandemic-disrupted year of 2020, which saw it post revenue of $1.32 billion. This tally was up 1.3% from the nearly $1.31 billion generated in 2019. Additionally, 2020 sales were up almost 8% from 2018’s result.
Notably, Informatica’s revenue from perpetual licenses has declined substantially over the years, replaced instead with rising demand for subscriptions. As the data management sector becomes increasingly convoluted, stakeholders of INFA stock can reasonably look forward to this demand set rising in prominence.
To be sure, not everything about Informatica is sterling. Typical for tech firms, Informatica consistently runs net losses (averaging losses of $173 million from 2018 through 2020). However, in 2020, thanks to a combination of robust revenue and cost-cutting measures, the enterprise software firm posted operational income of nearly $21 million. With sales during the first 6 months of 2021 at a blistering $324 million against a net loss of only $36.3 million, Informatica is on pace to deliver impressive results this year.
To be fair, a $9 billion valuation for an IPO tied to an unprofitable organization may seem a tad too much for investors. However, prospective buyers of INFA stock must focus on the underlying company’s potential to positively disrupt several industries with its multifaceted digital solutions matrix.
Indeed, Informatica covers the core essentials of holistic digital integration.
- Data analytics: Assessing what went wrong and what went right thereby allowing enterprise-level clients to formulate profit-maximizing strategies.
- Data management: Allowing the multiple layers and components of a major organization to communicate and function seamlessly with each other under a secure network.
- Data science: Forwarding smarter decisions through the power of AI and machine learning, making corporate initiatives more efficient and cost-effective.
Where INFA stock is particularly enticing is that its underlying services have no apparent limitations regarding usability. For instance, Informatica partners with Discount Tire to consolidate customer information under a single master record thereby allowing any Discount Tire store location to quickly address every client’s needs.
In addition, Informatica provides excellent solutions for the pharmaceutical industry, for example, leveraging its AI protocols to find the most appropriate candidates for clinical human trials.
While impressive, investors should note that the new-issue-specific Renaissance IPO ETF (NYSEARCA: IPO) is up just under 10% on a year-to-date basis, while the broader equities benchmark SPDR S&P 500 ETF Trust (NYSEARCA: SPY) is up 23.5% during the same frame.
True, much of the underperformance is tied to certain special purpose acquisition companies (SPACs), which were overhyped and failed to deliver. Nevertheless, the comparison serves as a reminder how volatile IPOs really are.
How to Buy Informatica IPO (INFA) Stock
With the Informatica IPO coming up shortly, most retail investors must acquire shares at the open. This process is straightforward if you know how to buy stocks. If not, just follow the steps below.
Step 1: Pick a brokerage.
With rising competition forcing brokerages to offer similar financial incentives to join, investors should focus their search of best brokers on interface accessibility and opportunities to expand financial acumen.
Step 2: Decide how many shares you want.
As a step into the vast unknown, IPOs are incredibly risky. Therefore, you should elect a balanced share count to mitigate downside risk.
Step 3: Choose your order type.
Before placing your trade, understand 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:
- Select your action type (buy or sell).
- Enter the shares you want to acquire (or sell).
- Hit the Buy (or Sell) button.
Follow the same sequence for limit orders (but include your execution price).
INFA Restrictions for Retail Investors
Before jumping on an IPO, review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons. Basically, anyone with privileged (non-public) information that would provide an unfair advantage should not participate.
A typical public market debut sees underwriters provide pre-IPO access (or new issues at their initial offering price) only to institutional investors. ClickIPO democratizes this process by facilitating pre-IPO access of select opportunities to its members.
Big Data for Potentially Big Profits
As enterprises migrate their vast data sources to the cloud, the need to filter the digital noise into actionable advice will only grow exponentially in the years ahead. That’s one of the key fundamental drivers supporting INFA stock. Nevertheless, the record-setting IPO market has proven volatile this year, warranting caution for prospective buyers.
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.