2 Newly Public Stocks That Belong on Your Watch List

In 2021, over 700 companies have gone public so far, and it can be hard to sift through them to find the best in the bunch. Plenty of new companies will likely fizzle out quickly, but a few have strong competitive advantages, adoption, and opportunity. Here are two companies that have recently gone public that I think could be wonderfully successful over the next 10 years. 

1. Latch

Latch (NASDAQ:LTCH) has created a smart lock system for large apartment complexes that combines hardware with software. With its smart access tools, tenants can enter and exit their apartments without needing a key, being able to do it from their phones. They can also let in whomever they need at any time, anywhere. 

Image source: Getty Images.

For landlords, Latch’s software is the key to success. Landlords can see when tenants enter and exit buildings and manage tenant access to specific areas, all without having to leave their office. Landlords can also restrict access to tenants who move out, which eliminates the hassle of changing locks or collecting keys. 

Latch’s customers are large apartment complexes that own dozens of apartments, so once Latch’s hardware is put into these complexes, it would be extremely hard for its customers to stop using it. This is likely why Latch has not lost a single customer since 2017. For any company to compete with Latch, it would have to develop long-lasting relationships with large apartment builders, which would be difficult because Latch already works with some of the biggest ones, including Brookfield, Avalon Bay, and Tishman Speyer. 

Working with those big names has unlocked incredible growth for the company. Second-quarter revenue grew 227% year over year to $9 million and quarterly total bookings increased over 100% year over year to $96 million. Bookings are important for Latch: When contracts get set up, apartment builders agree on using Latch’s products before the apartment building is even made. The bookings represent the revenue that Latch is expected to get once the building is built, which can take up to two years. 

Latch’s gross margin is not pretty today because it loses money on the locks, which is its major revenue source right now. As landlords continue paying the subscription fees for the software, however, software revenue is expected to become the primary revenue driver. With a software gross margin of 90%, the company’s total gross margin will likely improve, which is already taking place. Total gross margin for the second quarter of 2021 reached 8.5% compared to -18% one year ago. 

With such a small revenue base, the company still has a lot to prove, but with little major competition in the apartment complex smart lock space, along with international and commercial expansion opportunities on the horizon, Latch has all of the keys it needs to be wildly successful.

2. Riskified

If you were an e-commerce merchant, would you worry about receiving fraudulent…