Raspberry Pi Holdings (RPI.L)
Fundamental analysis
The Raspberry Pi technology company was founded in 2008 by students from Cambridge University. The company makes small computers that fit on a single circuit board. The company is based in Cambridge and has over 100 official suppliers worldwide.
The original intention was to sell and develop small, inexpensive computers to promote interest in computers and programming among young people and teenagers. However, this intention worked out much better than the makers intended and their first range of small computers began to sell massively outside the target group. The computer was bought mainly by those interested in robotics, home and industrial automation. They appreciated the simplicity, solid computing power and modularity of the product. The computers have USB and HDMI connectivity as standard. In 2015 Raspberry Pi became the UK’s best-selling computer.
The company listed its IPO in June 2024 on the London Stock Exchange and is now a constituent of the FTSE 250 index.
Estimating the size of the market is very difficult due to the specific nature of the product. The company itself estimates the potential market at up to USD 21 billion and admits that the original market it targeted now represents only 28% of its turnover. 72% is industrial computers. Raspberry Pi has already sold more than 60 million of its computers. A basic version of the computer sells from about $20, while a complete set sells for about $100. The price of the computer is therefore really low.
In 2019, the company had a turnover of about $ 52 million, in 2023 it was $ 265 million and this year the company expects to surpass the $ 300 million turnover mark. Net profit is above 10% of turnover, in 2023 it was USD 31 million.
The complete production of computers is outsourced, the main manufacturer is SONY.
The geographic distribution of sales is:
– Europe 38 %.
– North America 29%.
– Asia 26%
– Rest of the world 7%
PE is 27.98
Results
For 1H 2024, EBITDA increased to $20.9 million. The IPO brought in $31.8 million for the company.
The company sells its products in 75 countries.
Firmat is now focusing on brand building.
The company employs 115 people, most of whom are also shareholders of the company. They are therefore very interested in the company’s good results.
Technical analysis
The average volume is above 600,000 shares traded per day.
Raspberry Pi has a short trading history, hence the two hundred day moving average is not present.
The price has bounced off support at 316 pence per share. At the same time, it has broken the downtrend line.
The RSI is in the neutral zone, close to the overbought line.
Conclusion
Raspberry Pi is selling a self-developed product that has defined a new market. This seems to be still evolving and the company is trying to adapt the small computers to the needs of different customers.
The actual market size estimates of $21 billion are debatable. The company is profitable, it is making a profit. But that hasn’t translated into a share price, investors are cautious.
The positive news is that most employees are also shareholders, so they have a huge stake in the company’s growth.
Geographically, the company’s revenues are well distributed.
However, a positive economic development for the company does not automatically translate into a positive share price and earnings for shareholders. If the profit can be translated into value for investors, for example by paying a dividend, the stock can grow. If everything remains as it has been, the stock may go sideways or fall even further.