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Klaviyo recently went public for the first time. 2022 did not have many IPOs (initial public offering) as the market was down, so I have been very happy to see companies having more faith this year and going public. That said, I normally do not invest in IPOs as a general rule as I want to wait and see where the stock ends up. Klaviyo, however, does interest me as a company. Is the stock a buy?
Klaviyo is a marketing automation platform that mostly works with SMS and email. That is what piqued my interest in this company. That is obviously a very valuable service, and a company built around this is one I like the idea of owning if I can buy it at a good price.
Klaviyo is currently trading at around an $8 billion valuation. At this valuation, one is buying this company at a price/sales ratio of 13.57. With this in mind, I believe that the company is very very overvalued. That is, of course, to be expected though as its a high growth company.
One thing that I keep seeing brought up as a negative for Klaviyo is how dependent they are on Shopify. Shopify is responsible for a lot of the company's revenue. Investors must understand that if Shopify ever stopped working with Klaviyo that it would be a huge hit on their revenue. I'm not really worried about that though. Shopify is one of Klaviyo's biggest investors so hurting Klaviyo would hurt them.
I personally would not buy Klaviyo at its current valuation. I think the stock will fall in the short term, and if it falls enough, I will then buy shares in the company. I hope that it does happen as I do want to buy this stock.
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