Meet 5 cybersecurity unicorns that could IPO in 2020 Zack Whittaker @zackwhittaker / 9 months There was a lot of moving and shaking in the cybersecurity unicorn world in 2019. CrowdStrike, a Sunnyvale, California-based cybersecurity company, filed for a $100 million IPO on Tuesday. Meanwhile, one view is that … Cybersecurity Mainstay McAfee Files for IPO It seems the company will be returning to the stock market after a nearly decade-long absence. September 29, 2020 No comment. It plans to trade on the Nasdaq with Goldman Sachs as lead underwriter, and reports a $140 million net loss on $250 million in revenue for 2018. 7 High-Yield Dividend Companies to Invest in During the Pandemic, 7 Real Estate Stocks to Tour Before Year’s End, Louis Navellier and the InvestorPlace Research Staff, Niu Will Continue to Ride High on Converging Transport Trends, Stock Market Live Updates Tuesday: Vaccinations Start, Stocks Struggle, 7 Cheap Stocks to Buy Before the Market Realizes their Worth, It’s Crazy That Palantir Stock Is On Track for Annual Gains of 1,386%. Here’s the million-dollar question: can McAfee recruit talented engineers to produce such services? The company’s management has seen the importance of moving into cloud-based cybersecurity, a term Gartner has coined Secure Access Service Edge (SASE). As my colleague at InvestorPlace.com notes, MCFE has some poor financials under its belt. Full Bio. Cybersecurity Firm McAfee Files For Second IPO. Yet, it’s a mistake to write off McAfee as a wholly failed IPO. Telos (Nasdaq: TLS) targeted to raise approximately $254M from the Ashburn, Virginia-based cybersecurity firm's initial public offering Thursday, offering 15M … Don’t Sit This Out. As CEO, why risk falling below 6% returns (and miss your interest payments) when you can stay the course at 10% and receive your year-end bonus? And if management can grab onto this fast-growing trend, then McAfee could still become the next “millionaire-maker” stock. Many people think the initial public offering (IPO) market is dead. Cybersecurity Stocks: More M&A On The Way? The initial public offering came a decade after the company was acquired by Intel and then a majority stake transferred to private-equity firm TPG. Two competitors in the space, CrowdStrike (NASDAQ:CRWD) and FireEye (NASDAQ:FEYE), spent 61% and 45% of revenues on sales and marketing, respectively, in 2019. If they could find a company earning 10% returns, buy it out with borrowed money at 6% interest, then that 4% difference was theirs to keep. The Ashburn, VA-based company was founded in 1971 and booked $180 million in revenue for the 12 months ended June 30, 2020. Kent Thune. Companies from Hertz (OTCMKTS:HTZGQ) to Toys “R” Us became corporate shells of their former selves as management funneled cash toward interest payments instead of R&D or capital expenditure. Just make sure you’re ready to pull the trigger. That’s because the company already generates more than half of its revenue from its enterprise segment, a business that serves 78% of the Fortune 500 companies. McAfee (NASDAQ:MCFE) stock went public last month to muted Wall Street reception. These deals became known as leveraged buyouts (LBOs). Sumo Logic is the first cybersecurity IPO in 2020 Sumo Logic is a cloud-based machine data analytics company that was founded in Redwood City, Calif. in … A number of cybersecurity companies are firmly in the club of private companies worth $1 billion or more. There was just one problem: maintaining 10% returns meant that most bought-out companies stopped investing for future growth. Cybersecurity company Darktrace is targeting a $5bn (£3.8bn) valuation as it lines up banks for an initial public offering in London, it has been revealed. The financial skinny: The company is offering 31 million shares plus another 6 million shares offered by selling shareholders. Read The Balance's editorial policies. It was a year that saw two of the biggest exits in cybersecurity history: CrowdStrike went public valued at $3.35 billion and Cloudflare rocketed 20% in its first day on the stock market. Cybersecurity IPOs: two biggies to report... for now Rapid7 and Sophos go IPO while many cybersecurity firms pursue M&A and investments. And that meant hundreds of company failures. But I’m not as bearish about McAfee’s prospects. Suppose McAfee could come in with a product that links its device-to-cloud offerings with more pressing issues (i.e., network security offerings and endpoint security solutions). Print Article McAfee’s second trip to the public equity markets didn’t continue the recent success of technology IPOs. Clearly, the cybersecurity market is booming. If that pace keeps up, there’s little to suggest that the cybersecurity “bubble” will burst any time soon. Cybersecurity software maker McAfee Corp. has filed to go public, adding to the roster of companies rushing to cash in on a hot market for U.S. initial public offerings. All this, however, still amounts to “hope” – the most dangerous four-letter word in investing. Today, there are almost 100 times more phishing sites than traditional malware ones. Copyright © 2020 InvestorPlace Media, LLC. Years of private equity ownership saddled the once-innovative company with $4.8 billion in debt and a corporate culture more interested in hitting sales targets than creating new products. The company plans to trade on Nasdaq with the ticker MCFE. So, investors looking to catch MCFE might take a small position in the company today but wait several quarters to see whether the newly listed firm is genuinely ready to fight in the big leagues. To overcome its lackluster IPO, McAfee will have to shed its private equity past (and lower its mountain of debt). Application Security is forecast to grow from $ 3.4B in 2020 to $4.5B in 2023, attaining a 9.7% CAGR. All rights reserved. Best Cybersecurity ETFs for 2020 Investing in Cybersecurity ETFs and Which Are the Best to Buy Now ••• Getty Images By. For example, Cloudflare-- which got its start offering internet security and website performance services -- recently had its initial public offering (IPO). Cloud security will boom 33% to $585 million in 2020, Gartner said. Recent data suggests that cybersecurity investing could reach $250 billion by 2023, and spending rose in 2019 more than any other industry. A Cowen & Co. survey in May showed that 18% of companies spent money on cloud security products in 2018, with that number expected to boom to 38% in 2020. In contrast, there were four cybersecurity IPOs last year – Cloudflare, CrowdStrike, Ping Identity and Tufin. Copyright © Cybersecurity spending on AI also is rising. McAfee is headed back to Wall Street, as investors this year continue to wrap their arms around tech stocks and an unceasing cadence of cyberattacks dominate headlines. Airbnb Stock IPO Is Set to Soar 200%. Its ownership structure also favors its private equity owners. Now that CrowdStrike and Cloudflare have graduated to the public market, there are a number of cybersecurity companies that could make the leap. Sumo Logic Files For First Cybersecurity IPO Of 2020 Data analytics vendor Sumo Logic Monday became the first cybersecurity company to pursue an initial public offering (IPO) since the onset of … A technology company went public late last month with no customers, no product, no venture capital investment or not even a clear idea of what business it's … > Cybersecurity Firm McAfee Files For Second IPO. Shareholders are offering about 6 million shares in the IPO, according to its recent regulatory filing. And that starts to pit McAfee against industry heavyweights like Palo Alto Networks (NYSE:PANW) and Akamai (NASDAQ:AKM), companies that have returned 360% and 244% respectively since mid-2012 (compared to 158% from the S&P 500). 2020 InvestorPlace Media, LLC. Security Services is projected to be a $66.9B market this year, increasing from $62B in … The 12 Best Stocks to Buy for a Whole New Year of Returns in 2021, 9 Best Stocks to Buy for the Santa Claus Rally. According to Google’s Transparency Report, the number of phishing sites overtook malware sites in 2016. McAfee Corp which spanned out of America’s leading chip producer Intel Corp will sell about 31 million shares. After a Disappointing IPO, Could MCFE Still Be a Millionaire-Maker? Cybersecurity firm McAfee Corp recently disclosed it will be raising about $814 million through a U.S. initial public offering. quotes delayed at least 15 minutes, all others at least 20 minutes. On the date of publication, Tom Yeung did not have (either directly or indirectly) any positions in the securities mentioned in this article. In the late 1980s, Wall Street investors realized they could use declining interest rates to make enormous amounts of money. But if the company does start moving in the right direction, it could well become the next hidden “millionaire-maker” stock. Follow Twitter. UK Cybersecurity Firm Darktrace Preparing For £1.5 Billion IPO written by Jonathan Adams July 23, 2020 Reports today suggest that UK cybersecurity firm Darktrace, a rising star in the booming sector, has begun preparations for an IPO that would value the company at upwards of £1.5 billion. In that case, the legacy security company could bypass much of the initial sales process in cross-selling its wares. Yet, it’s a mistake to write off McAfee as a wholly failed IPO. Kent Thune is the mutual funds and investing expert at The Balance. Financial Market Data powered by FinancialContent Services, Inc. All rights reserved. He is a Certified Financial Planner, investment advisor, and writer. Cybersecurity 2015 Initial Public Offerings. And that means the possibility for upselling and cross-selling. Shares hovered at its IPO price before sinking 15% as investors fretted about the company’s debt load and ownership structure. The article Cybersecurity solutions provider Telos sets terms for $210 million IPO originally appeared on … Over the past decade, hackers have shifted their focus from viruses to phishing and other cybercrime. Follow Linkedin. It plans to list on … It was a year that saw two of the biggest exits in cybersecurity history: CrowdStrike went public valued at $3.35 billion and Cloudflare rocketed 20% in its first day on the stock market. Nasdaq Article printed from InvestorPlace Media, https://investorplace.com/2020/11/after-disappointing-ipo-could-mcfe-stock-be-the-next-cybersecurity-millionaire-maker/. McAfee Corp., the storied cybersecurity company founded by John McAfee, has filed for an initial public offering. Don’t expect its private equity owners to tolerate big bets. That’s because, under private equity ownership, it concentrated too hard on meeting short-term numbers while missing the boat on cybersecurity. These unicorns represent some of the best talent, technologies and offerings in cybersecurity, but the club is getting crowded. Sumo Logic filed for an IPO last month, and had its first day of trading this month. Meet 5 cybersecurity unicorns that could IPO in 2020. These fears are well-warranted. 1125 N. Charles St, Baltimore, MD 21201. Despite still having almost $4 billion of debt and 60% shares still owned by private equity, McAfee is reasonably positioned to shift its business into cybercrime. It still earns most of its income from legacy antivirus software, which concentrates more on malware. There was a lot of moving and shaking in the cybersecurity unicorn world in 2019. The decade-old company hauled in … All rights reserved. On February 11, 2020 By admin. Security. That’s because private equity has a terrible habit of turning fast-growing companies into zombies. 1125 N. Charles St, Baltimore, MD 21201. Tom Yeung, CFA, is a registered investment advisor on a mission to bring simplicity to the world of investing. And that’s a problem for McAfee. There was a lot of moving and shaking in the cybersecurity unicorn world in 2019. As a growth stock investor, I stop in my tracks whenever I see “private equity ownership” written anywhere in a company’s history. In the same period a year ago, the company had a net loss of $146 million on $1.3 billion in revenue. Years of high debt and underinvestment in R&D has taken its toll on the once fast-growing company, something Wall Street noted with MCFE’s lackluster IPO. posted on Sep. 29, 2020 at 4:28 am. McAfee is just the second cybersecurity company to announce an IPO in 2020. It is expected to price during the week of November 16, 2020. 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