There’s no denying it: humans are error-prone and often inefficient. Consequently, enterprise automation software maker UiPath (NYSE:PATH) offers solutions to help businesses get better and faster results. It’s an intriguing business model, but PATH stock hasn’t exactly been massively successful.
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Granted, most tech stocks have tumbled for the past few months. However, UiPath’s shares have been declining almost constantly since May of last year.
That is almost inexplicable and even inexcusable. After all, during the third quarter of last year, UiPath’s sales jumped 50% year-over-year.
Could the shares’ decline represent a prime buying opportunity? The company’s latest government customer, along with its foray into smart-factory technology, has made the bullish thesis on PATH stock stronger.
A Closer Look at PATH Stock
Going back to where it all started, UiPath went public on April 21, 2021, with an initial public offering (IPO) price of $56, which was above the expected price range of $52 to $54.
As is sometimes the case with IPOs, PATH stock was hyped a great deal initially, but that didn’t last long. UiPath’s shares peaked at $90 on May 28.
Unfortunately, it has been all downhill from there for the stock. Even prior to the tech wreck that started in November, UiPath had already declined to $50.
From a technical perspective, it’s typically a bad omen when a stock falls below its IPO price. Thus, it probably shouldn’t have been too surprising that UiPath’s shares landed in the $30s in early 2022.
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Given the recent news about the company, UiPath’s beatdown is baffling. Hopefully, the market will come to its senses soon and more buyers of the stock will emerge, lifting the shares.
The Best Client Ever
Among the greatest fears of practically any business is to be in the crosshairs of the Internal Revenue Service (IRS). You can fight a lot of battles, but you can’t fight the taxman, as the expression goes.
Conversely, it’s definitely a good thing for a business to get on the IRS’s good side. How about having the IRS as a customer, though?
Since the government has massive quantities of capital to spend, it’s certainly great news that UiPath has a customer in the federal government. More specifically, the IRS reportedly plans to use UiPath’s software robots to improve its financial and procurement activities.
IRS Chief Financial Officer Teresa Hunter indicated that this is part of a broader change by the organization, saying, “The agency is making a fundamental shift with robotic process automation technology.”
We can count this as a loss for the bureaucracy and a win for efficiency. The data proves the point, as one IRS team leveraged the power of robotic process automation (RPA) to execute “nearly 1,500 contract modifications in 72 hours, a process that manually would have taken one year.”
Making Factories Smarter
You just never know where you might see RPA show up next. Just to provide another example of the great usefulness of UiPath’s RPA, the company just announced that it had become a sponsor of Deloitte’s The Smart Factory @ Wichita.
As a result, UiPath “will showcase the role of RPA in the future of smart factories.” That’s a timely initiative by the company as supply-chain disruptions continue to wreak havoc on the national and global economies.
How can RPA make factories smarter and ultimately better? As UiPath Global Manufacturing Lead Sebastian Seutter concisely explained, automation-optimized smart factories “can dramatically reduce throughput time and increase factory output, while enabling reduced lot sizes, ensuring sustainable operations, and lower operating costs.”
The Bottom Line
Having the IRS as a client is, of course, a major coup for UiPath. And the firm’s decision to partnering with The Smart Factory to develop smart factories is, well, smart.
Still, Wall Street refuses to recognize UiPath’s true value as a rapidly growing business. That situation may change over time, so investors should be patient with the company’s shares.
This means holding onto PATH stock and not worrying about its short-term price moves. Eventually, investors will recognize that the software/robot revolution is, like it or not, here to stay.
On the date of publication, David Moadel 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.
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