Nearshore Americas

Why Globant’s Stock Price is Going Up and Up

In the past few weeks, billions of dollars were wiped off the stock markets across the world, yet the stock price of Globant has been rising continuously. Over the past year, the stock price has risen nearly three times in value, from $11.86 per share to $35 until recently.

According to Marketbeat, which gathers stock ratings from different brokerage firms, Globant shares have earned an average rating of “Hold” from the seven research firms. Two investment analysts have rated the stock with a sell recommendation, two have assigned a hold recommendation and three have assigned a buy recommendation.

Analysts say this huge success in the capital market might catapult the Argentine software outsourcing firm to even greater heights. But what is really driving Globant’s success in the stock market?

Globant, though incorporated in Luxembourg, was founded in 2003 in Buenos Aires, where it maintains its principal operating subsidiary. Many Argentine companies have suffered from erratic government policies, galloping inflation and rising costs. In early 2014, many feared even Globant would meet the same fate.

Whenever inflation rises, companies in Argentina see their employees demand a pay hike. With nearly 3,000 employees in Argentina, inflation was a great cause of concern for Globant too.

But Globant never tried to walk the beaten path. Instead of looking for ways to leverage a large and cost-effective workforce like that of Indian technology firms, Globant focused fully on innovation, developing software in emerging technologies, including cloud computing, gaming and big-data.

Globant’s success lies in its IT staff. To keep on sharpening skills, they participate in hackathons, ideation sessions and flip-thinking events. At hackathons, for example, Globant employees join other budding techies to deal with certain technology challenges. Events of this kind provide employees with an opportunity to learn and try out new ideas. This is precisely what sets Globant apart from most other technology outsourcing firms.

Some analysts say that even blending an advertising agency with computer programming also played in its favor. British advertising giant WPP, which has an expansive operation in the Americas, is one of the investors in Globant.

In the past few months, Globant has relentlessly beaten market expectations. In an announcement in August, the company reported $60.60 million in quarterly revenue, compared to analysts’ expectations of $59.35 million.

Over the past two years, Globant’s workforce too has almost doubled, with the company launching new delivery centers in Mexico City, Lima, New York, Medellin, Mar del Plata, and Mendoza, in addition to Bogota. Earlier this year, Globant acquired India-based software developing firm Clarice Technologies.

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Globant’s revenue in 2014 increased to $200 million, a 26% increase from the previous year. Some reports say that during the same year its portfolio of clients increased by 13% while the number of projects went up 33 percent.

About 90% of its clients are in the U.S., with customers that include Google Inc., Linkedin Corp., JWT, Electronic Arts and Coca Cola.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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