Olo's $10.25 Acquisition Offer: A Fair Deal or Undervalued Opportunity?

The proposed acquisition of Olo Inc. (NYSE: OLO) by private equity firm Thoma Bravo has ignited debate among investors and analysts. The $2.0 billion all-cash deal, priced at $10.25 per share, represents a 65% premium over Olo's closing price of $6.20 on April 30, 2025, the last trading day before media reports of a potential transaction emerged. While the offer appears generous on paper, a closer examination of Olo's recent stock performance, valuation metrics, and strategic landscape raises questions about whether shareholders are being fairly compensated—or left with undervalued shares.

The Stock's Journey: From Undervalued to Near-Offer Levels

Olo's stock has been on a rollercoaster since its 2024 IPO. After hitting a 52-week low of $4.20 in July 2024, shares rebounded sharply, reaching $10.12 by July 3, 2025, just days before the acquisition was announced. This surge—driven by optimism around its cloud-based ordering and payment solutions for restaurants—closed the gap between the stock's market price and the eventual acquisition offer.

Crucially, the $10.25 offer is only 1.3% above the $10.12 closing price on July 3, the day before the deal's formal announcement. While the 65% premium over April 30's price is headline-grabbing, it understates the reality that Olo's stock had already climbed 63% from its lows by the time the deal was finalized. This raises the question: Did the buyer capitalize on a rebounding stock to negotiate a lower premium than it might have earlier?

Valuation Metrics: A High P/E Ratio and Thin Profit Margins

Olo's trailing twelve-month price-to-earnings (P/E) ratio of 509.14 paints a stark picture of its valuation. While this reflects investors' bets on future growth—Olo serves over 750 restaurant brands and 88,000 locations—the company reported a net loss of $897,000 in its latest fiscal year. This mismatch between high valuation and minimal profitability could signal overvaluation in a sector increasingly scrutinized for its reliance on growth over earnings.

Thoma Bravo's offer effectively freezes Olo's valuation at a point when its stock had already recovered significantly. If the company's growth falters post-acquisition—due to integration challenges or shifts in the restaurant tech landscape—the $10.25 per share could prove a ceiling rather than a fair value.

Risks and Considerations for Shareholders

1. Private Equity's Playbook: Thoma Bravo, known for leveraged buyouts, may prioritize cost-cutting and short-term profitability over Olo's long-term innovation. This could erode the platform's competitive edge in a crowded space.
2. Market Volatility: Olo's stock has swung wildly in recent years, with 16 instances of 5%+ daily moves in the past year. The $10.25 offer may lock in gains for some shareholders but leave others exposed to downside if the stock's volatility resumes post-deal.

1. Undervalued Potential: While the offer is a premium over April's price, Olo's $284.94 million in annual revenue and strategic partnerships (e.g., with Starbucks and Domino's) suggest it could command a higher valuation if public markets stabilize.

Investment Implications

• Current Shareholders: Accepting $10.25 per share locks in a 63% gain from Olo's 2024 lows and a 30% increase from its 2025 lows. Given the risks of private equity ownership and market uncertainty, this may be a prudent exit. A historical backtest of buying on days with 5%+ gains and holding for 10 days showed a total return of 91.54%, but also a maximum drawdown of 31.1%, underscoring the trade-off between potential gains and risk.
• New Investors: Avoid chasing the stock near the offer price. The deal's approval and closing (expected by year-end) could drain liquidity, and the company's transition to private status removes its NYSE listing, limiting future upside. The strategy's 55.31% compound annual growth rate (CAGR) and Sharpe ratio of 1.33 highlight strong risk-adjusted returns in the past, but recent volatility suggests caution.

Conclusion

Thoma Bravo's $10.25 offer presents a mixed calculus for Olo shareholders. While it represents a meaningful premium over depressed 2024 prices, the stock's rebound to near-official levels before the deal suggests the offer may not fully capture Olo's potential value. For shareholders, this is a “take the money and run” scenario, especially given the risks of private equity's profit-driven strategies. For outsiders, the acquisition underscores the challenges of valuing high-growth tech firms in volatile markets—and the wisdom of heeding the exit offered by a premium bid.

Final recommendation: Accept the offer if you're a shareholder, but avoid buying OLO near $10.25 unless you're betting on post-deal synergies—a risky proposition.