Grid Dynamics Holdings Inc: Overlooked Tech Stock Could Double in Price

Grid Dynamics Stock Builds on Gains From Record Q2 Results

Grid Dynamics Holdings Inc (NASDAQ:GDYN) is an excellent, overlooked technology stock that has been pounding the broader market. Which is saying a lot, especially when you consider that the stock market is at record levels.

As of this writing, GDYN stock is up by:

  • 36% over the last month
  • 86% over the last six months
  • 130% year-to-date
  • 270% year-over-year

As you can see in the following chart, the S&P 500 looks like it’s on life support compared to Grid Dynamics stock. Which isn’t to say the S&P isn’t on fire. It’s up by 21% year-to-date and 26% year-over-year. It’s just that this pales in comparison to GDYN stock.

Chart courtesy of StockCharts.com

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Probably the only reason Grid Dynamics stock is flying under the radar of most investors is that it only went public in March 2020—not the best time for the stock market, if memory serves correct.

Regardless, GDYN stock has been on an excellent trajectory since then.

It comes by those gains honestly. Despite the pandemic and global recession, Grid Dynamics Holdings Inc reported strong fourth-quarter and full-year 2020 results. That momentum carried into 2021 with record first-quarter and second-quarter financial results.

Investors seem to like what they see. Since announcing record second-quarter results on August 4, GDYN stock has rallied by 43%.

Grid Dynamics stock might have gotten a little ahead of itself, and by all accounts, it could take a breather on short-term profit-taking, but its long-term outlook is fabulous.

GDYN Stock Overview

Grid Dynamics helps businesses become more agile and create innovative digital products and experiences. (Source: “Investor Presentation: Q2 2021,” Grid Dynamics Holdings Inc, August 5, 2021.)

The company provides enterprise-level digital transformation services for Fortune 1000 corporations in the U.S. and in Central and Eastern Europe.

Grid Dynamics Holdings Inc works with its clients on digital transformation initiatives that cover strategy consulting, early prototypes, and enterprise-scale delivery of new digital platforms.

The company offers technical consulting, software design, development, testing, and Internet service operations services.

It applies various technologies—such as artificial intelligence (AI), data science, cloud computing, Big Data, and DevOps—to enable digital transformation across the enterprise.

Grid Dynamics Holdings Inc serves customers that operate in the retail, technology, media, consumer packaged goods/manufacturing, and financial services sectors.

Some of its impressive blue-chip clients are Apple Inc (NASDAQ:AAPL), Alphabet Inc (NASDAQ:GOOG), Levi Strauss & Co. (NYSE:LEVI), and Home Depot Inc (NYSE:HD).

Record Second-Quarter Results Exceed Expectations

For the second quarter of 2021, ended June 30, Grid Dynamics announced that its revenue increased by 22% sequentially and 113% year-over-year to $47.7 million. (Source: “Grid Dynamics Reports Second Quarter 2021 Financial Results,” Grid Dynamics Holdings Inc, August 5, 2021.)

After factoring out revenue of $9.3 million from the recent acquisition of Daxx Web Industries B.V. and Tacit Knowledge, the company’s second-quarter revenue was still up by 17.7% at $38.4 million.

Its gross profit was $19.8 million, or 41.5% of its revenue, compared to $15.3 million, or 39.2% of its revenue, in the first quarter of 2021 and $8.4 million, or 37.5% of its revenue, in the second quarter of 2020.

Grid Dynamics Holdings Inc reported a second-quarter net loss of $1.5 million, or $0.03 per share, compared to a net loss of $2.1 million, or $0.04 per share, in the first quarter of 2021 and a net loss of $2.2 million, or $0.04 per share, in the second quarter of 202.

The company reported adjusted net income of $6.1 million, or $0.10 per share, compared to first-quarter adjusted net income of $3.1 million, or $0.05 per share, and second-quarter 2020 adjusted net income of $400,000, or $0.01 per share.

Leonard Livschitz, CEO, commented, “Our second quarter results exceeded our expectations on multiple fronts as we witnessed healthy business momentum across all our industry verticals. In addition to reporting a record quarter on the revenue front, we were able to achieve our long-term targets on the profitability.” (Source: Ibid.)

Analyst Take

Grid Dynamics Holdings Inc is an unjustly overlooked tech stock with great momentum and long-term growth potential.

The company recently reported the highest quarterly revenue in its history and achieved its long-term targets on profitability. Since going public in March 2020, Grid Dynamics has doubled its revenue, navigated the coronavirus pandemic, completed two acquisitions, and announced the redemption of all unexercised public warrants.

The first half of 2021 was monumental for Grid Dynamics, but the second half of this year and 2020 could be even better.

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