Cybersecurity investing in 2021 — how CrowdStrike became the cyber hero we need
The biggest threats of 2020:
In 2020, high-profile cybersecurity attacks have pushed cybersecurity stocks to all-time highs — including hacks on Twitter, Zoom and even a cybersecurity firm, FireEye.
But the worst of them all… On Dec. 13 it was discovered that Solarwinds, an IT management software with over 300,000 customers including the US government, had been hacked.
This gave hackers access to US government networks and data — labeled as the “worst hacking case in the history of America”.
From a “nice-to-have” to a “must-have”
Data breaches and hacks have become a top concern amongst corporations…
- Cybercrime cost global organizations $6t in theft and damages in 2021 and is expected to grow 15%/year.
- Cybersecurity is a massive $156.5b market in 2019… And it’s expected to grow to over $300b by 2027.
With more devices on the internet generating more data, the need for cybersecurity will only continue to grow.
- With 41% of the workforce working from home during COVID, organizations are even more vulnerable to hacks.
- An extra 1 billion people are expected to connect to the internet by 2022 and the amount of data to grow 61%/year.
CrowdStrike: The hero we need
One of the biggest beneficiaries has been CrowdStrike ($CRWD), the largest cybersecurity company by market cap — which surged 15% since the Solarwinds hack.
CrowdStrike sells software that uses artificial intelligence to spot anomalies then determine the best protection.
- With $1b in cash, 0 long-term debt and being profitable (non-GAAP), CrowdStrike is in a strong financial position to grow.
- 80%+ sales growth in each of the past 6 quarters — a tremendous growth rate for a company generating nearly $800m annually.
Founded in 2011, CrowdStrike made a name for itself by being the first to spot a data breach on the Democratic National Committee.
CrowdStrike differentiated itself with its tech — allowing new security products to be easily built on top of its existing products. This makes it easier to offer new products/features to existing customers, expanding its market potential.
For investors… Rising hacks lifts all boats
Cybersecurity is a large but competitive industry — globally, there are over 1,200 cybersecurity vendors. To compete, these companies spend nearly 60% of their revenue on sales & marketing.
However, recent growth in the industry has benefited nearly all companies in the industry. Other cybersecurity companies including Zscaler, Okta and Cloudflare have all seen tremendous growth in their sales and stock prices.
The modern war is fought digitally and cybersecurity has become the first line of defense — and also a $300b opportunity.