If nothing else, remember the name CrowdStrike...
This company will soon hold the most important cybersecurity IPO in 2019...
Right now, the cybersecurity industry is in the midst of incredible growth.
In 2018, cybersecurity was valued at $137.8 billion globally. In the next four years, Money Morning Defense and Tech Specialist Michael Robinson expects the value to go up to $231.9 billion.
That's 68% industry growth in just four years.
And that's just the start.
By 2021, Cybersecurity Ventures expects cybercrime damages will reach $6 trillion.
And that growth should continue for years. New regulations are always popping up, like the EU's new Global Data Protection Regulation (GDPR) from 2018, which requires...
- Companies to hunker down on protecting people's personal data.
- Getting consent for data processing.
- Protecting people's privacy with anonymous data collection.
- Notifying people of data breaches.
- Safely delivering data across different borders.
- Companies overseeing GDPR compliance with data protection officers.
Not to mention the massive security breaches making news almost every week.
Just look at Facebook Inc.'s (NASDAQ: FB) data scandal from 2018.
Or the 2017 Equifax Inc. (NYSE: EFX) data breach that released the information of 143 million people. In 2018, 500 million Marriott International Inc. (NASDAQ: MAR) accounts were leaked. Within the first three months of 2019, 2 million government officials' information has been hacked and stolen from the Dow Jones.
We're at a point in time when cybersecurity isn't a luxury, but a necessity.
All this industry growth underscores why CrowdStrike is about to hold one of the most important cybersecurity IPOs of 2019...
Why This Cybersecurity IPO Will Be So Important
It may not be a household name, but CrowdStrike is already worth billions...
The company was founded in 2012 by two former McAfee executives, George Kurtz and Dmitri Alperovitch. In June of 2018, they raised over $200 million from private investors - putting Crowdstrike at a predicted value of $1 billion.
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In October, the company enlisted Goldman Sachs Group Inc. (NYSE: GS) to help with its IPO.
Beyond that, Crowdstrike processes over 1 trillion security threats per week globally.
That being said, there are some risks...
While CrowdStrike shows huge promise (and potential massive profits), there's often a lot of volatility for new IPOs.
Investing in IPOs can be a rigged game. Let's say institutional investors are offered shares of an IPO at $20. These are the people and banks who are putting down tens of millions of dollars.
Afterward, the cybersecurity IPO becomes available to the everyday investor - people like you and me. We go in, buy it at $30, and the demand pushes the value up to $40. Once the IPO lock-up period ends, those big original investors sell. The stock drops down to $25, and all of a sudden we're at a $5 loss per share, while they still pocket a $5 gain...
This is incredibly common.
That's why we recommend keeping an eye on CrowdStrike stock once it starts trading, but not buying immediately. Wait six months to a year, even. Check out the first two earnings reports. If EPS and revenue are both growing, then you can feel comfortable investing.
However, we have an investment we can recommend right now that has massive profit potential...
This Is the Best Way to Play This Cybersecurity IPO
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The best way to play the cybersecurity industry's massive growth is with an ETF. Today, we've found the best one to invest in: ETFMG Prime Cyber Security ETF (NYSE: HACK).
When it went public in 2014, HACK was the first real ETF focused on cybersecurity. It tracks the Prime Cyber Defense Index. HACK has 55 holdings focused on consulting, services, aerospace, IT, hardware, and software for cybercrime defense.
While stocks from the United Kingdom, Japan, and Israel are all a part of HACK, 86% of the companies are from the United States. Many of these firms work with other big corporations as well as government agencies. This means they're safer and more stable as a result of long-term contracts and continuously increasing share values.
This includes some of the heavy-hitting companies, like Cisco Systems Inc. (NASDAQ: CSCO) and Symantec Corp. (NASDAQ: SYMC).
However, HACK also has plenty of great, but smaller, breakout cybersecurity firms...
- Palo Alto Networks Inc. (NYSE: PANW) offers an intricate range of security options for big companies that need protection for their IT data and systems. Their primary focus is protecting data, users, and all devices across a network. This means big companies that have employees access information from personal devices can reduce the risk that often comes along with it.
- CyberArk Software Ltd. (NASDAQ: CYBR) focuses on password encryption management services. Its biggest product is a password vault tool to manage and monitor all password entries from one primary platform.
- Splunk Inc. (NASDAQ: SPLK) protects machine data made by corporate networks and websites. The importance of this type of protection cannot be overlooked. Data of this nature can reveal user behavior and operational information - among other security risks.
- Proofpoint Inc. (NASDAQ: PFPT) is known for its focus on phishing scams. It's a niche part of the cybersecurity industry, but it has excellent tools for account securitization and privatization.
HACK has been a strong investment since Robinson first recommended it. In fact, it's up 74% over the last three years.
But that's just the start...
Michael Robinson predicts another 40% jump for shares over the next three years.
As we said before, cybersecurity is no longer a luxury, but a necessity. Each year, cybercrimes and cybersecurity spending will continue to rise.
However, that has created an opportunity for you to rake in some fast profits.
New and old cybersecurity companies are dominating the current market. In one way or another, you've probably already used some of their products and services.
So, you might as well take advantage of the rapidly growing industry and watch out for the best cybersecurity IPOs and ETFs...
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About the Author
Daniel Smoot is a Baltimore-based editor who helps everyday investors with stock recommendations and analysis. He regularly writes about initial public offerings, technology, and more. He earned a Bachelor's degree from Towson University.