The Uber and Lyft IPOs might have flopped hurting early investors in the pocket immediately after their high profile stock exchange listings but there have also been IPOs this year that have gone into orbit. Beyond Meat, the plant-based meat alternatives company has seen its share price rocket by around 450% since it made its stock exchange debut in May. And this week Cyber security start-up Crowdstrike saw its own share price gain over 80% over its first two days of trading.
The company, most famous for having caught Russian hackers up to no good in the servers of the USA’s Democratic National Committee, finished the first day of its shares trading freely on the Nasdaq exchange post-IPO with its share price up over 70%. It had started the day up almost 90% on its IPO pricing, indicating the strength of investor demand.
Crowdstrike’s IPO raised $612 million from a price range that was bumped up significantly during the IPO process from a starting point of $19 to $23. The final price was $30 but given the bounce since Wednesday the company’s founders and early investors may feel they could have pushed the boat out further during the IPO. The company’s market capitalisation has now passed $11 billion, a huge multiple of almost four on the last private funding round almost exactly a year ago. Investors then bought in at a valuation of $3 billion.
Investors are clearly encouraged by revenue growth of over 100% to $250 million over the tax year until the end of January. The company’s core revenue stream is subscriptions to its cloud platform which detects malware on computers. Subscriber number almost doubled to over 2500. However, like many newly floated tech companies, Crowdstrike is still operating at a net loss, which grew to $140 million this year from $135 million and $91 million over the fiscal years ending early 2018 and 2017 respectively.
Crowdstrike has seen its profile rise in a crowded marketplace as a result of high profile discoveries of two Russian espionage groups that hacked DNC email servers during the US presidential election campaign in 2016. The subsequent leaks were a significant blow to the hopes of Democrat candidate Hilary Clinton. She eventually narrowly lost out to Republican rival Donald Trump.
The company’s immediate post-IPO success is another sign of a buoyant market for cloud-based cyber security tools. Chief executive George Kurtz commented:
“The architecture is different. [It] can collect data at scale in the cloud and analyse that in real time leveraging artificial intelligence to see threats that have never been seen before [and that] has resonated with customers.”
Crowdstrike will invest the proceeds of its IPO into further developing its platform’s capabilities as well as international expansion.
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