5 Big Things To Know About Dell’s Stock Price One Month In

Going Public

Dell Technologies debuted on the New York Stock Exchange on Dec. 28 with high hopes that the public market will elevate the $91 billion infrastructure giant to new heights.

The Round Rock, Texas-based company’s stock, trading under the ticker symbol ‘DELL’, has fascinated investors and financial experts alike, in part, due to other public companies including VMware, Pivotal Software and SecureWorks falling under the Dell Technologies umbrella, as well as Dell’s massive debt burden stemming from its $67 billion acquisition of EMC in 2016.

Top executives for the company, including CEO and founder Michael Dell and chief financial officer Tom Sweet, told CRN that they’re bullish about being a public entity once again. With one month under its belt, here are five things you need to know about Dell Technologies’ new stock.

Stagnant Stock

Dell Technologies debuted on the NYSE on Dec. 28 with a price of $46 per share. The DELL stock has basically hovered at around that price point ever since. The price reached a high of $48.87 on Dec. 31 but began to decrease through the middle of January, hitting a low of $42.62 on Jan. 16. However, the stock has been slowly trending upwards over the past week, reaching $47.22 as of Tuesday morning.

Analysts such as Citigroup’s Jim Suva say the market under-appreciates the ability for Dell to pay down its roughly $50 billion in debt stemming from its blockbuster acquisition of EMC, which includes $4.3 billion due in the second quarter of this year. “We believe Dell will be able to pay down the $4.3 billion debt due in 2Q 2019 via its cash flow and current cash and short-term investment,” Suva said in a note last week. “Following this action consensus will recalibrate its interest costs lower closer to our estimate which will all materially boost consensus EPS higher in [the second half] 2019 and beyond. Therefore, we encourage investors to build a position in Dell shares prior to mid-2019.”

Financial Analysts Expecting Higher Price

Citigroup, which initiated coverage of Dell last week with a “buy” rating, isn’t the only one expecting the company’s stock to climb this year. RBC Capital also started covering DELL with an “outperform” rating and a price target of $56 per share, citing the company’s “attractive enterprise portfolio” and valuation in a recent note. The global investment bank expects Dell to move higher on margin expansion and sales growth, saying the stock could trade at upwards of $80 per share in the coming years.

On Tuesday, Raymond James gave Dell a ‘outperform’ rating, citing the company’s market share gains and enterprise IT spending trends as reasons to be bullish about Dell. Zacks Investment Research recently gave the DELL stock a Zacks Rank of No. 1 which means a strong buy. JPMorgan issued a $60 price target for DELL stock, while Morgan Stanley analyst Katy Huberty also expects Dell’s stock price to increase thanks to the company’s storage momentum.

VMware Stock Steady As A Rock

Through the acquisition of EMC, Dell owns an 81 percent stake in VMware, the fast-growing virtualization pioneer and software superstar. Dell was able to bypass the traditional IPO route to the public market through a VMware stock swap deal. After Dell’s entry to the public market, VMware’s stock fell to $130.67 per share during the start of 2019. However, VMware’s stock quickly rebounded and now sits at $145.91 per share as of Tuesday morning, which is much higher than its $125.05 price per share one year ago.

VMware’s stock has shown much resiliency in spite of some obstacles in Dell’s nearly year-long effort to enter the public market via the VMware stock deal.

DELL, VMV, PVTL, SCWX Market Cap’s

After one month of being on the NYSE, Dell’s market cap is nearly $34 billion. Comparatively, VMware’s market cap is around $60 billion – roughly $26 billion more than Dell. Security specialist SecureWorks, which falls under the Dell Technologies umbrella, had its stock hit an all-time high of $20.92 per share on Jan. 28. According to multiple estimates, SecureWorks has a market cap of around $1.5 billion. SecureWorks stock was at $20.18 as of Tuesday morning.

Pivotal Software, which is also part of Dell Technologies, has a market cap of $4.65 billion. The software provider and owner of Pivotal Cloud Foundry has had its stock hovering around $17 per share in 2019. Pivotal shares are currently trading at $17.80 as of Tuesday morning.

Who Owns DELL?

Although Dell is now listed on the NYSE, public holders only own an approximately 22 percent stake in the company. Michael Dell is by far the largest single shareholder of DELL, owning around 55 percent of the company. Private equity firm Silver Lake Partners, which owns approximately 18 percent, plans to invest in Dell for the long run, according to Dell’s CFO Sweet. “Silver Lake is completely in. They're long term holders,” said Sweet. “They have repeatedly told us that they're in for the long term.”

Dell Technologies is projecting sales of $91 billion for its fiscal year 2019, which ends Feb. 1, up from $80 billion in fiscal year 2018.

“The momentum in the business is quite strong. If you look at our data center business, we are the largest and we're bigger than Cisco. Bigger than IBM. Bigger than HPE,” said Michael Dell. “We're larger and growing a lot faster. So if you step back and think about it in hindsight, what we've done is we combined the leading storage company with the leading server company which created the leading hardware infrastructure company and we combined that with the leading software infrastructure company. So now you got the essential infrastructure company. It all looks like a beautiful picture.”