Why Sixto Thinks You And I Should Buy UiPath

Why Sixto Thinks You And I Should Buy UiPath

over 2 years ago2 mins

Summary:

  • A newly listed stock with a solid process automation business and the potential for breakthroughs in artificial intelligence
  • A tech stock that nonetheless provides some hedge against inflation.

Tell us about yourself, Sixto

I hail from San Antonio, Texas. I specialize in insurance and banking finance for high growth companies.

What’s the pitch?

Long-term investment in UiPath (ticker: PATH). The company has impressive free cash-flow for such a recent initial public offering (IPO) in the high growth sectors of robotic process automation (RPA) and Artificial Intelligence (AI). 

What does UiPath do?

Their software – with or or without the assistance of consultants – allows companies to automate processes, reducing headcount and reducing human error. The AI sector goes a step further in learning and creating complex models for prediction, reinforcement, etc.

What’s your investment thesis?

On the RPA front, big banks with stringent compliance needs are a major and consistent revenue driver that keep the lights on at UiPath.

AI is their dark horse since they are privy to scenarios and usages at a rate not matched by most AI shops.

Their software is quickly becoming the standard – and as small shops start adopting it UiPath will grow with them.

This is an inflation hedge in tech, as impossible as that sounds, since labor is usually the largest operating expense for UiPath’s clients.

What are the key events you’re watching?

  • Revenue per client growth, which confirms stickiness and healthy adoption of the feature set.
  • If UiPath can offer unique solutions from their consulting and AI learnings it can help shape aspects of certain markets and even productize package solutions to faster revenue at low variable costs.
  • Adoption by startup and smaller firms is key to growth on a platform basis, albeit not on revenue in the short term.

What’s the upside potential if your thesis is correct?

Their AI can quickly overshadow their RPA business if a breakthrough occurs. This is statistically in their favor due their high customer growth and diversity of usage applications and industries. 

What are the big risk factors you’ve spotted, and how do you plan to mitigate them?

  • Inflation. They are seen as any other IPO tech stock that follows the ebb and flow of its contemporaries in the space with regards to inflation.
  • Competition from Appian and Alteryx in the sector or a buyout of either by a larger tech company.

Do you want to follow Sixto down the UiPath? Give us your thoughts on his pitch here.

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