SentinelOne (S) IPO Stock Looks Like a Buy Amid Cybersecurity Push

The cybersecurity company plans to offer 32 million shares in the IPO, which is set to be priced at $26–$29 per share. The IPO will value SentinelOne at $7 billion. The net proceeds from the offering will mainly be used for working capital and general corporate purposes.

SentinelOne will also raise an additional $50 million in a concurrent private placement with several investors, including Tiger Global, Insight Venture Partners, Third Point Ventures, and Sequoia Capital.

SentinelOne hasn’t officially revealed an IPO date yet, but various reports indicate that it could come as early as June 30. The IPO's listed underwriters are Morgan Stanley, Goldman Sachs, BofA Securities, Barclays, and Wells Fargo Securities, among others. SentinelOne has granted the underwriters an option to buy an additional 4.8 million shares at the IPO price.

SentinelOne has incurred net losses each year since its inception. The company reported a net loss of $117.6 million in fiscal 2021 (ended Jan. 31) compared to $76.6 million in fiscal 2020.

SentinelOne’s revenue grew 100.2 percent YoY to $93.1 million in fiscal 2021 and 108.2 percent YoY to $37.4 million in the first quarter of fiscal 2022 (ended April 30). The IPO terms put the company’s fiscal 2021 price-to-sales multiple at 75.2x. While it might look high in absolute terms, SentinelOne is a high-growth stock and the revenues should increase sharply in the coming years.

Peers CrowdStrike and VMware are trading at NTM EV-to-sales multiples of 38.1x and 5.0x, respectively.

SentinelOne stock will trade under the ticker symbol “S.” The stock will be listed on the NYSE. The company is offering IPO shares at $26–$29.

The outlook for SentinelOne stock looks promising. The company thinks that its total addressable market size is expected to reach $40.2 billion by 2024. The drivers include endpoint security, security analytics, operations, and IoT security.

SentinelOne protects mobile phones and laptops from security breaches with the help of AI technology to detect unusual behavior in enterprise networks. The company’s business got a boost as several employees worked from home amid the COVID-19 pandemic.

SentinelOne's 124 percent dollar-based net retention rate indicates it can upsell existing customers. Also, its ARR (annual recurring revenue) grew by 116 percent YoY to $161 million in the first quarter of fiscal 2022. SentinelOne serves more than 4,700 customers, including Nvidia and Wells Fargo.

Once SentinelOne stock starts trading, you can buy it through your stockbroker like Robinhood.