CrowdStrike soars 71% in big debut as tech IPOs rush ahead
The cybersecurity company makes software to protect clients from attacks
New York — Software maker CrowdStrike Holdings soared in its trading debut after raising $612m in one of the biggest-ever initial public offerings for a cybersecurity company.
Shares opened at $63.50 in New York and rose as much as 97% from their IPO price to $67. The stock closed up 71% to $58 on Wednesday. That valued the company at about $11.41bn, almost quadruple its $3bn valuation last June when it raised about $200m in a private funding round.
CrowdStrike sold 18-million shares on Tuesday at $34 each, above its already elevated target range, the company said in a statement confirming an earlier report by Bloomberg. The Sunnyvale, California-based company had marketed the shares for $28 to $30, a target range it had earlier raised from $19 to $23.
Founded in 2011 by former McAfee executives, CrowdStrike makes software to protect clients from cyberattacks, including predicting and detecting potential hacks. Its clients include Amazon.com and HSBC Holdings, according to its filings.
CrowdStrike CEO George Kurtz said he expects continued interest in the company partly because of geopolitical events, which will prompt governments and businesses to review their security.
“The stock is going to move.” Kurtz said. “We just need to stay focused on the long term — protecting our customers from breaches.”
The IPO is the fourth-largest by a cybersecurity firm, according to data compiled by Bloomberg. The largest was Avast’s £602m listing in London in 2018. The only other IPOs topping CrowdStrike’s were Gemalto’s €515m offering in 2004 and a £352m listing by Sophos Group in London in 2015.
CrowdStrike’s value approaches that of Symantec the maker of Norton antivirus software. Symantec, which went public in 1989 in a $16.5m IPO, is currently valued at $11.86bn.
Some of CrowdStrike’s peers were buoyed by its gains. Carbon Black climbed as much as 4.4% while BlackBerry, which agreed to buy Cylance in 2018, was up as much as 8.1%.
Like many in this year’s crop of tech companies going public, CrowdStrike is unprofitable. It reported a net loss of $140m on revenue of $250m for the year ended January 31, compared with a net loss of $135m on revenue of $119m in the same period a year earlier, its filings with the US Securities and Exchange Commission show.
Uber Technologies’s $8.1bn offering is the year’s biggest, followed by smaller ride-hailing rival Lyft’s $2.34b n IPO as well as the $2.9bn listing by Avantor, a chemical maker for the life sciences industry.
Other tech-related listings in 2019 have included Pinterest and Zoom Video Communications.
So far the results have been mixed for investors: While Lyft has crashed 19% from its offer price, Zoom Video remains the fourth-best performing US IPO of 2019, with its shares up 185%.
Slack Technologies is set to go public next week in an unusual direct listing that, according to people familiar with the matter, could value it at $16bn to $17bn. Other tech related companies considering IPOs include Peloton Interactive, Postmates and WeWork.
CrowdStrike has said that it had raised $200m in a funding round led by General Atlantic, Accel and IVP that valued the business at more than $3bn. Alphabet’s growth equity arm CapitalG also took part in the fundraising. The company has raised more than $450m since its founding, according to data compiled by Bloomberg.
Because CrowdStrike’s Class B stock carry 10 votes per share compared with one each for Class A shares, executives directors and current investors will control about 75% of the voting rights of the company after the IPO, according to the filing.
CrowdStrike’s IPO was led by Goldman Sachs, JPMorgan Chase, Bank of America and Barclays. The company’s shares trade on the Nasdaq Global Select Market under the symbol CRWD.