Key Points
Klaviyo gained ground after Salesforce announced it would acquire rival Braze.
The company operates a customer engagement platform built on artificial intelligence (AI) technology.
The market views the acquisition as a validation for Klaviyo, sending its shares higher.
Klaviyo (NYSE:KVYO) stock charged sharply higher Tuesday morning, gaining as much as 11.8% in early trading. As of 1:13 p.m. ET, the stock was still up 11.6%.
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The catalyst that sent the software-as-a-service (SaaS) specialist higher was the acquisition of a rival in the space.
Image source: Getty Images.
A big deal
In a press release that dropped earlier today, tech bigwig Salesforce announced it had entered into a definitive agreement to acquire Braze (NASDAQ:BRZE) for $47.50 per share in an all-cash deal that values the company at $5.66 billion. It also represents a 58% premium over the stock's closing price on Monday.
Braze's customer engagement platform uses predictive intelligence to help marketers build personalized messages and customized ad campaigns to target customers in real time.
So what does this have to do with Klaviyo?
Braze and Klaviyo play in the same sandbox, so to speak, though they have distinct markets. While Braze focuses on mobile apps and digital, Klaviyo specializes in direct-to-consumer marketing for e-commerce providers. Despite their different approaches, the overlap in personalized messaging made them competitors.
Investors see the acquisition of Braze at a significant premium as a validation of Klaviyo's approach, sending shares higher on the news. Furthermore, joining Salesforce will likely shift Braze's focus toward the company’s enterprise customers, reducing much of the remaining overlap and increasing the market opportunity for Klaviyo. Moreover, Salesforce's purchase of Braze may stoke interest among other tech buyers, making Klaviyo a potential acquisition target.
Moreover, at 23 times forward earnings, Klaviyo stock is attractively priced.
Danny Vena, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Braze and Salesforce. The Motley Fool has a disclosure policy.