The current IPO landscape has been dotted with multi-billion-dollars companies looking to go public. The largest and most recent of these, Uber (NYSE: UBER), entered the market with much anticipation but ended up performing poorly. As such, the current IPO hype has largely dissipated as many have begun to see the current market as a turbulent one. At the same time, some smaller, less well-known IPO’s have performed amazingly, so there’s still hope for some of the smaller IPOs that are coming up soon. One of those, a cybersecurity company called CrowdStrike, is planning a $3 billion IPO on the NASDAQ.
Having filed for its long-awaited IPO on Tuesday, CrowdStrike joins a number of tech IPOs that have seen massive valuations. However, the company stands out from the crowd in the sense that there’s been a lack of cybersecurity offerings in the market, giving CrowdStrike an opportunity to potentially see significant gains.
The company filed that it would be raising up to $100 million during the IPO, but that figure is often used as a placeholder as will likely change in the days and weeks to come. They will be listed under the “CRWD” ticker on the NASDAQ, with Goldman Sachs, J.P. Morgan, and Bank of America Merrill Lynch working as the company’s main underwriters.
The only other cybersecurity offering that the market has seen in 2019 so far has been Tufin Software Technologies (NASDAQ: TUFN), a relatively small case in comparison to many of the larger security IPOs that took place in 2018. One of these was Cyber Black (NASDAQ: CBLK), a Massachusetts-based cybersecurity company that went public in May 2018. The company ended up surging 26 percent on their first day of trading, although ended up spending the past eight months trading below its original IPO price. Either way, traders would do well to pay attention to when CrowdStrike does go public, as there could be a good opportunity in the days following the IPO.
So far, CrowdStrike has raised $481 million to date since it’s founding back in 2011, with $200 million coming recently from an investment round that helped push their valuation to the $3 billion mark. Back in September 2018, CEO George Kurtz had told MarketWatch that the company could go public anytime but has chosen to do so now. “Everybody talks about a platform, not everybody has it. You have to have that cloud-native architecture to be a true SaaS platform, so if you look at the investors who came in at a valuation of $3 billion-plus, they’re expecting a return on that,” said Kurtz at the time.
At the same time, CrowdStrike reported a loss of $140 million on revenues of $249.8 million across 2018. In comparison to the previous year, which saw losses of $141 million and revenues of $118.6 million, this is seen as an improvement. The main negative for the company is that it faces stiff resistance in what’s already a hot field. Cybersecurity giants like McAfee and Symantec Corp are all competitors against CrowdStrike, so the company has its work cut out for it if it hopes to succeed in the long term.
Either way, this upcoming IPO is one to keep an eye out if only for the fact that there has been almost no other cybersecurity IPO’s in 2019 so far.
