Samsara announced plans to enter the public market last month by filing for an initial public offering (IPO) with the SEC. The company is a California-based Internet-of-Things (IoT) firm that gives other organizations data insights related to their business.
The company has pioneered the ‘connected operations cloud’ which allows businesses that rely on physical operations to tap into data from the vast amount of connected IoT devices to gain valuable insights and improve their overall operations.
Samsara expects to sell 35 million shares of its Class A stock at a proposed midpoint of $21.50. The company also intends to issue Class C shares but these will not be issued at the time of the initial offering.
If the IPO is successful at the midpoint price, the company will hold a value of roughly $9.8 billion. This marks a drastic increase from the company’s valuation of $5.4 billion following a successful funding round in 2020.
When can I buy Samsara Stock?
No specific date has been given by the company for its impending IPO, but analysts expect it to list sometime next week barring any last-minute issues.
The company has confirmed, however, that it intends to list on the NYSE under the ticker symbol IOT.
The financial reports provide quite impressive reading for Samsara. Revenue for the first nine months of the year totaled $302 million, indicating a 73% increase compared to the same period from last year. Net losses have also been decreasing consistently with the $102 million reported in October down from the $210 million loss last year.
Gross margin and free cash flow are also both trending up, with the former hitting a mark of 71% – up from 59% in 2019 – and the latter up over 15% on the same nine-month period from 2020.
Samsara’s growth potential
There seem to be a lot of positive factors behind Samsara’s impending public debut. The financials show a company continuing to grow steadily and well on its way to profitability. It also operates in a market that is set for immense future growth. One report has the global IoT market growing to $1.4 trillion by 2026, which would mark a doubling of its value in only four years.
Samsara has also established a viable niche within this burgeoning market. IoT is such a broad industry that it can be easy to get lost in the shuffle. Samsara decided to focus on fleet management and physical operations, as is evidenced by this line in its SEC filing,
“Many assets used for physical operations, such as vehicle fleets, machinery, factories, and remote equipment generate enormous amounts of operational data which often cannot be accessed.”
Samsara is offering other businesses a chance to accurately quantify this operational data to gain insights never before available.
However, caution is still advised considering the state of technology-based IPOs this year. Of more than 50 tech companies that debuted on the U.S. markets this year, only one is less than 20% below its highest price for the year. More than 20 of these tech debutants have lost over half their value in what should certainly act as a warning sign to potential investors.
That’s not to say Samsara won’t be a worthy investment, the growth potential is very real. Rising inflation and the threat of impending interest rate hikes have just forced investors away from newly listed tech stocks. If you do decide to invest in Samsara, ensure you’re willing to hold the stock long-term as there will undoubtedly be some ups and downs in the coming months and years.
Financial Writer at MyWallSt
Pádraig’s favorite stock is Nike. Growing up as a sports fanatic, seeing Nike collaborate with athletes like Jordan, Lebron, and Ronaldo inspired him and cemented the brand in his mind. Now, despite having failed miserably in his attempts to earn a fabled Nike sponsorship, he still believes in the innovation and creativity behind Nike and is convinced they will only grow stronger as the world's leading sports brand.