Raspberry Pi, the recent addition to the UK stock market, is already making waves. With the potential of joining the FTSE 250 index looming, investors are curious about what this tiny, low-cost computer company has to offer. Let’s delve deeper into Raspberry Pi to see if it’s worth adding to our investment portfolio.
What does Raspberry Pi do?
- Raspberry Pi focuses on creating small, affordable computers with impressive processing power, catering to a variety of uses such as:
- Education: Facilitating programming, electronics, and computer science learning.
- Hobbyist projects: Enabling the creation of robots, home automation systems, and retro game consoles.
- Industrial applications: Controlling machinery and sensors in various settings.
Moreover, the company is venturing into emerging industries like artificial intelligence, machine learning, and Internet of Things applications, suggesting significant long-term growth prospects.
A rare profitable tech IPO
- Despite being a recent entrant to the stock market in June, Raspberry Pi has showcased promising financials. In 2023, the company witnessed a 41% year-on-year revenue growth, reaching $266 million. Furthermore, it recorded a profitable 14% operating margin and a significant 70% increase in diluted earnings per share.
- With the release of Raspberry Pi Pico 2 and RP2350, the firm is optimistic about its future product line. However, competition in the tech industry and potential supply chain disruptions for semiconductors pose as notable risks.
A massive potential growth opportunity
- The stock is currently trading at a high price-to-earnings multiple of 32, indicating investors’ confidence in Raspberry Pi’s growth potential. The company’s management envisions a $21 billion market encompassing various sectors like industrial, embedded, enthusiast, and educational computing. Furthermore, experts predict substantial growth in the global Internet of Things market, potentially reaching $4 trillion by 2032.
Despite the promising prospects, it’s essential to note that Raspberry Pi is still in its early stages. As we eagerly await the earnings release later this month, it will be crucial to gauge the company’s performance before making any investment decisions.
