CrowdStrike soars in its stock market debut as tech IPOs rush ahead
Software maker CrowdStrike Holdings Inc. soared in its trading debut Wednesday after raising $612 million in one of the biggest-ever initial public offerings for a cybersecurity company.
Shares opened at $63.50 and rose as high as $67 — up as much as 97% from their $34 IPO price. The shares ended the day up 71% at $58. That valued the company at about $11.4 billion, almost quadruple its $3-billion valuation last June.
CrowdStrike said it sold 18 million shares Tuesday at $34 each, above its already elevated target range. The Sunnyvale, Calif., company had marketed the shares for $28 to $30, a target it had earlier raised from a range of $19 to $23.
Founded in 2011 by former McAfee Inc. executives, CrowdStrike makes software to protect clients from cyberattacks, including predicting and detecting potential hacks. Its clients include Amazon.com Inc. and HSBC Holdings, according to its filings.
CrowdStrike Chief Executive George Kurtz said he expected 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 approximately $855-million listing in London last year. The only other cybersecurity IPOs topping CrowdStrike’s were Gemalto’s offering in 2004 and a listing by Sophos Group in London in 2015.
CrowdStrike’s value approaches that of Symantec Corp., the maker of Norton antivirus software. Symantec, which went public in 1989 in a $16.5-million IPO, is now valued at $11.9 billion.
Some of CrowdStrike’s peers were buoyed by the company’s gains. Carbon Black Inc. shares climbed as much as 4.4%. BlackBerry Ltd. jumped 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 $140 million on revenue of $250 million for the year that ended Jan. 31, compared with a net loss of $135 million on revenue of $119 million the prior year, its filings with the U.S. Securities and Exchange Commission show.
Uber Technologies Inc.’s $8.1-billion offering is the year’s biggest, followed by smaller ride-hailing rival Lyft Inc.’s $2.3-billion IPO as well as the $2.9-billion listing by Avantor Inc., a chemical maker for the life sciences industry. Other tech-related listings this year have included Pinterest Inc. and Zoom Video Communications Inc. 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 U.S. IPO of 2019, with its shares up 185%.
Slack Technologies Inc. is set to go public next week in an unusual direct listing that, according to people familiar with the matter, could value it at $16 billion to $17 billion. Other tech-related companies considering IPOs include Peloton Interactive Inc., Postmates Inc. and WeWork Cos.
CrowdStrike has said that it had raised $200 million in a funding round led by General Atlantic, Accel and IVP that valued the business at more than $3 billion. Alphabet Inc.’s growth equity arm CapitalG also took part in the fundraising. The company has raised more than $450 million since its founding, according to data compiled by Bloomberg.
Because CrowdStrike’s Class B stock carry 10 votes per share compared to 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 Group Inc., JPMorgan Chase & Co., Bank of America Corp. and Barclays. The company’s shares trade on the Nasdaq Global Select Market under the symbol CRWD.
