Tech stocks are plunging to new 52-week lows. With so many companies making new lows, it can be hard to pick which ones are most attractive as rebound candidates. UiPath (NYSE:PATH) is one such firm; PATH stock is now down from a 52-week high of $90 to just $17 per share now. The company is a leader in robotic process automation (RPA) software. RPAs allow companies to automate certain repetitive tasks such as data entry so that their skilled employees can spend more time on things that matter instead of repetitive tasks.
UiPath has enjoyed a tremendous amount of success in developing the RPA market. Despite being a somewhat under-the-radar company until its initial public offering (IPO), UiPath is already huge. The company reached nearly $900 million in revenues last year and is expected to bring in close to $1.1 billion this year. Even as it crosses a billion in annual revenues, it’s still growing the top-line at more than 20% per year, and the company is getting fairly close to reaching profitability on an earnings per share basis. So if the business is humming along, why is the stock crashing?
UiPath would be having enough issues given the general plunge in tech stocks. Unfortunately, it has a specific company problem to overcome as well. That would be, specifically, that the company is based out of Romania. The company has a large portion of its employees in Romania. That’s been alright so far, however, Romania borders Ukraine and thus the conflict in that neighboring country is a cause for concern. On top of that, UiPath has done significant business in Ukraine and Russia historically, and sees the current geopolitical tensions causing a significant drop in its annual recurring revenues. Further to that, businesses in other neighboring countries, such as Romania, may reduce their software spending until there is more certainty on the political front.
Finally, it should be noted that UiPath isn’t the only major player in the RPA industry. It is, however, by far the most important player with a listing on a U.S. stock exchange. That being noted, it faces heavy competition from Blue Prism, which is listed in London, and from Automation Anywhere which is private and raised funding at a $6.8 billion valuation in 2019. So it’s not a guarantee that UiPath will be able to end up being the leading vendor in this market. And, unfortunately, the conflict in Ukraine may cost UiPath a crucial bit of momentum against its rivals. All that being the case, there’s a reasonable case for buying the dip in PATH stock now in hopes of getting in ahead of a rally once there is peace in Ukraine and/or tech stocks start to recover.
On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
