- GritALPHA
- Posts
- Riding a Hot IPO
Welcome to the VIP edition newsletter from ALPHA, our Stock Deep Dive! Let’s get into it. 👇
Stock Deep Dive: Astera Labs (ALAB-US, $11.6B MCAP)
While timing the market as an investor is a fool’s game, it is a very prudent practice when going public.
IPO markets are incredibly cyclical, and specific periods are more conducive to publicizing your company.
When raising capital to go public, you want to fetch a valuation as high as possible. This prevents dilution of the existing shareholder base, rewards early investors to an outsized degree, and shows high confidence in the story.
But what is this valuation based on? Public comparable multiples. Multiple fundamentals value every company that goes public, whether earnings or revenue. This number is highly based on what similar companies were trading in the public markets then.
When the growth outlook is dire, stocks see their multiples compressed. An example is the aftermath of ZIRP during an epic collapse of software multiples from around 20x EV/Revenue in 2021 to 6x EV/revenue in 2022.
It’s safe to say that the IPO window was closed in 2022 and for most of 2023. Now, we’re seeing a couple of companies come to market, and this company is a poster child of listing exactly when the irons are hot.
There is no hotter investment space right now than the industry in which this company IPO’d.
Let’s dig in!
Overview 👉 What Does Astera Labs Do?
How Do They Win? 👉 Value Proposition
Product Suite 👉 Software Platform + 3 Core Products
Key To Understand 👉 Astera/Nvidia
By The Numbers 👉 Key Metrics
Risks 👉 Potential Pitfalls