- Stock went public Sept. 16 at 44, ended that trading day at 64.79
- Shares now roughly 9% below 90.90 buy point in an IPO base
- Relative Strength Rating is 87 out of 99; unusual for an IPO
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Can be as short as seven market days but usually several weeks, the IPO base is the first consolidation for a newly public company. IPO bases tend to be volatile.
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Investors with an appetite for software growth stocks this summer may have been tempted to jump in when three companies — Snowflake (SNOW), Sumo Logic (SUMO) and JFrog (FROG) — launched initial public offerings. Of those three software IPOs, though, only JFrog stock has now set up near a proper entry point. That makes it the IBD Stock of the Day.
JFrog stock trades about 9% below a 90.90 buy point from its IPO base. Shares were up 0.5% to 80.60 in afternoon trades. On the other hand, Snowflake and Sumo are far from their official buy points.
The JFrog IPO raised $509 million, more than Sumo’s $326 million and less than Snowflake’s whopping $3.4 billion, the most ever by a software company.
Generally-speaking, DevOps software companies sell tools that automate software development. But, there’s a wide range of companies.
JFrog Stock: Software Code Management Platform
Some specialize in testing new programming code or focus on security vulnerabilities as new apps are deployed. Meanwhile, Datadog and Dynatrace monitor new applications.
Datadog and Dynatrace are both on the IPO Leaders list. Sunnyvale, Calif.-based JFrog aims to carve out its own niche — what it calls “liquid software.”
“JFrog is often perceived as the ‘Database of DevOps’ as it has created the first end-to-end solution for managing software artifacts,” Cowen analyst Derrick Wood said in a recent note to clients. Software artifacts include a developer’s own programming code as well as byproducts produced during the development process.
“(JFrog’s) software code management solution enables developers to automate software update and release processes in order to speed up delivery cycles,” Wood added. “JFrog’s vision is to make software updates run through the DevOps pipeline like water runs through pipes. The notion of Liquid Software — liquifying the software development process in order to make software updates continuous — was created by JFrog’s founders.”
Cloud Computing Giants Rivals
Chief Executive Shlomi Ben Haim, along with Yoav Landman and Frederic Simon, started JFrog in 2008. JFrog competes most directly with GitLab, Docker, and Red Hat, part of IBM (IBM). But analysts say “pure-play” DevOps software companies also compete against the big cloud computing service providers — Amazon Web Services, part of Amazon.com (AMZN), Microsoft (MSFT) Azure and Alphabet‘s (GOOGL) Google. They all provide software development tools.
In its IPO filing, JFrog said it generated revenue of $104.7 million in 2019, up 65% from a year earlier. It reported a loss of $5.4 million in 2019 vs. $26 million a year earlier. Customers include Netflix (NFLX), Apple (AAPL) and Facebook (FB).
JFrog stock holds a Relative Strength Rating of 87 out of a possible 99. Snowflake stock lags with an RS Rating of 32 while Sumo’s is only 14. San Mateo, Calif.-based Snowflake continues to draw mixed reviews as more analysts initiate coverage on the provider of cloud-based data analytics software.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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