UiPath (NYSE:PATH) has steadily tumbled lower since its public debut in 2021. The latest sell-off for UiPath stock, which transpired last month, followed a highly disappointing earnings release chock full of takeaways that were anything but promising.

But with shares in this purveyor of robotic process automation (RPA) software, a type of business automation software, now changing hands at rock-bottom prices, is it time to buy in at the bottom? Not so fast!

Yes, it’s possible that PATH has finally bottomed out. The stock now trades at a far more reasonable valuation.

However, considering what was revealed at the earnings release, alongside additional factors, it’s hard to see this situation changing for the better soon. Instead of “buying the dip,” holding off for now is a better move. Here’s why.

Why UiPath Stock Collapsed After Earnings

Take a look at PATH on a stock chart, and you may think what I said above about a “post-earnings sell-off” is an understatement.

On May 30, right after UiPath’s latest quarterly earnings release, the stock fell by a staggering 34.1%, and that was after steadily sliding in the week leading up to the earnings report.

So, what was so bad about the UiPath stock earnings release as to cause such a negative reaction by the market?

Although the company beat on both revenue and earnings, the market focused instead of two key negative developments revealed alongside the latest results. First, news of Rob Enslin’s abrupt exit as CEO, replaced by UiPath co-founder Daniel Dines.

The company revised its full-year revenue guidance downward. UiPath previously projected revenue of $1.55-1.56 billion for fiscal year ending January 2025, but now expects $1.405-1.41 billion. CFO Ashim Gupta suggested increased customer scrutiny of UiPath’s deals.

With all of this in mind, the market’s strong negative reaction was not an overreaction. Rather, it was an appropriate response to news of material changes in circumstances.

An Uncertain ‘Path’ Back to High Growth

Based on UiPath’s latest full-year guidance, the company is on track experience a sharp deceleration in growth.

Based on the aforementioned outlook, annualized revenue growth is set to fall from around 23.6% in fiscal year 2024, to the high single-digits this fiscal year.

With this, UiPath stock is giving off serious “busted growth stock” vibes right now. The market can often be harsh on companies experiencing growth deceleration.

That’s why, in response to the downward revisions to guidance, investors have downwardly-revised PATH’s valuation. Shares today trade for 30.75 times forward earnings.

As this represents a reasonable price for a SaaS stock still experiencing moderate levels of growth, UiPath may be able to sustain this valuation.

However, to garner a market re-rating, and hence return to higher prices for shares, management must prove that UiPath is getting back on the “path” to high growth. Put simply, this could end up being easier said-than-done.

UiPath may be considered an AI stock, but the rise of generative artificial intelligence has made this RPA software provider’s future far more uncertain.

Management continuse to assert that its integration of gen AI features into its platform will allow it to benefit from this trend. However, the negative takeaways from the latest earnings release call this into question.

Lost in the Woods for Now, So Stay Away

Let’s be clear. UiPath isn’t getting out of the woods anytime soon. Barring a stunning earnings beat next quarters, chances are that the company and shares are going to remain lost in the woods. In turn, the market will maintain a “show me” stance about the stock.

This could mean PATH merely languishes at or near current prices. Or worse, slips down to prices south of $10 per share. There is, however, a silver lining to these past and likely future price declines.

With shares beaten down so much, if/when the company begins to more strongly convey that it stands to benefit from the gen AI trend, even after starting to rebound sharply, you’ll likely be able to dive back in at a reasonable price.

Keep an eye on UiPath stock, but until a recovery begins, stay away.

On the date of publication, Thomas Niel did not hold (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.