Is Riskified Stock a Buy on Robinhood IPO Access?

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As one of the latest stocks available through Robinhood IPO Access, Riskified gives retail investors something to clamor over.

Riskified stock will hit the New York Stock Exchange under the ticker RKSD very soon. The company wants to sell 17.3 million shares at a range of $18 to $20.

At the high end, that would make the company worth about $346 million. The Riskified IPO date could come as early as July 29 – but that will be confirmed once the company nails down its opening price.

Riskified expects a valuation of $3 billion.

Robinhood IPO Access stocks have been exciting so far. Figs Inc. (NYSE: FIGS) as much as doubled from its IPO price, and Clear Secure Inc. (NYSE: YOU) popped as high as 46%.

But if you thought Robinhood couldn’t go wrong with its IPOs, the F45 Training Holdings Inc. (NYSE: FXLV) IPO made you think again.

We predict the flashy gym franchise might not be able to compete with other high-tech fitness companies like Planet Fitness Inc. (NYSE: PLNT) and Peloton Interactive Inc. (NASDAQ: PTON). And the market seems to agree.

F45 stock priced at $16 a share, and it trades at $13 today. The stock continues to fall on renewed COVID-19 concerns shuttering gyms.

So, we know that stocks available on Robinhood IPO Access can go one way or another. And now you want to know where Riskified falls on that spectrum.

Let’s find out whether Riskified stock is a diamond or a dud today…

What Is Riskified Stock?

Riskified makes fraud and chargeback prevention technology. It’s software as a service (SaaS) for e-commerce to ensure transactions are secure and legitimate.

The Israeli company was founded in 2012 and has raised $229 million through several funding rounds to date. It had its Series E round in 2019 with contributions from General Atlantic, Fidelity Management, and others.

Today, it manages over 650 employees.

Riskified uses a variety of tools to detect and prevent fraud. Artificial intelligence and machine learning, for example, help analyze behavior in transactions. The software can become “smarter” over time, more able to associate certain behaviors with fraudulent activity.

Riskified customers include big brands like Prada, Ticketmaster, and Trip.com. Trust with big brands can be a huge deal in an emerging industry like this. But it does not appear to be helping the company’s bottom line just yet.

Here’s a closer look at Riskified’s latest finances.

Is Riskified Profitable?

Riskified currently runs on a loss.

For 2020, its annual loss was $7.2 million. The loss margin is expected to widen even further for 2021, with losses in the range of $19.4 million and $24.8 million.

The company made revenue of $170 million in 2020, with 50% CAGR since 2018. Revenue was up more than 30% from 2019 to 2020.

The company has 98% annual dollar retention rate (ADR) and a 117% net dollar retention rate (NDR). This simply means the growth of the existing customer base more than accounts for any losses from the same customer base. In terms of monetary value alone, it is not losing customers.

Though not profitable, its growing revenue and customer retention could make the company worth holding in the long run.

But there’s an even bigger picture here…

Should You Buy Riskified Stock?

Riskified operates in an important growing market as e-commerce booms worldwide. But for the same reason we couldn’t recommend F45, you might want to hold off on Riskified.

This company operates in a highly competitive space. Some e-commerce companies even provide their own competing security options. Stripe, for example, has similar software without need for its users to find a third-party solution.

Stripe is one of the biggest, most recognizable e-commerce platforms and has its own fraud prevention system. But even when it comes to third-party solutions, Riskified could struggle separating itself from the pack as well. It competes with a long list of companies including Signifyd, Kount, and Sift. And it’s hard to say whether it’s winning.

In a comparison on G2, reviewers felt Signifyd met the needs of their businesses better than Riskified. Reviewers said Riskified offered better ongoing product support. But they liked Signifyd better than Riskified for feature updates and roadmaps.

Overall, Signified beat Riskified with a 4.6 out of 5, a slim victory over Riskified’s 4.4 out of 5. Signifyd scored higher in meeting requirements, ease of use, and ease of setup.

Signifyd’s customers include giants like Shopify and Salesforce, so you can’t really argue from client lists that Riskified has better market exposure, either.

Long story short, there are other companies offering the same product as Riskified that could do as good or better a job.

Robinhood IPOs are still super exciting. But since we’re still waiting to see if Riskified can claw its way to profitability, it’s probably not the buy you want today.

Three Stocks Even Better Than Riskified

Chief Investment Strategist Shah Gilani just held his first-ever stock-picking lightning round event – running through more than 50 stocks to tell you if they are stocks to buy or stocks to sell.

Dozens are overpriced and overhyped – you should ditch them ASAP.

But Shah says THESE three stocks are “screaming buys.”

All three are trading at a discount… they’re under-the-radar companies most people haven’t even heard of… and they have massive tailwinds ready to send their share prices into the stratosphere.

To get the company names, tickers, and price targets for Shah’s picks, go here now.

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About the Author

Mike Stenger, Associate Editor for Money Morning at Money Map Press, graduated from the Perdue School of Business at Salisbury University. He has combined his degree in Economics with an interest in emerging technologies by finding where tech and finance overlap. Today, he studies the cybersecurity sector, AI, streaming, and the Cloud.

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