Advisor and Investor @ ConnectBud and CBNITS.
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I have been in the cybersecurity space since 2008 when I joined McAfee (through the acquisition of Reconnex) and have been enjoying this space since then. (Fun fact: I joined Reconnex the same day it was acquired by McAfee.)
This year the cybersecurity space is quite healthy considering the global uncertainty in the world. I took a look at the space, digging into data across the industry and came across a few trends:
1. Stocks have been on the upward trend.
2. Hiring trends look promising.
3. Acquisitions are still thriving.
4. Security startups are slowly being founded in 2020.
Having said that, some cybersecurity companies are showing flat growth and many cybersecurity startups that are facing a hard time to raise funds and are struggling to survive this year.
1. Stocks have been on the upward trend.
The stock price for some of the publicly traded cybersecurity companies shows that many of them are doing pretty good in this adverse time.
From January 2, 2020, to September 28, 2020, over the course of these several months, cybersecurity company stocks have been on the rise. Crowdstrike, originally at a stock market value of $49.44 at the beginning of January 2020, has risen drastically in the past several months to $137.43 as of September 28. Zscaler experienced a similar increase in stock value, from 47.33 at the beginning of January to $137.57 as of September 28. Other companies. such as Okta, Palo Alto Networks, Rapid7, SPlunk, and Check Point are also experiencing growth.
I went through the stocks one by one, looking at each stock and analyzing the growth in the last six months; cybersecurity company stocks are rising big time.
With the current remote working trend, the need for security has increased exponentially, especially of the security companies dealing with cloud security, phishing attacks, DLP (data loss prevention), GDPR (General Data Protection Regulation) are in great demand and driving the stock market to new heights.
2. Hiring trends look promising.
The open jobs on LinkedIn are showing a really strong trend of hiring for cybersecurity companies, which are increasing their workforce, some by 5%-15% by my estimation.
Through reviewing LinkedIn information regarding open jobs and current employee strength, I found that the following cybersecurity companies seem to have a number of job openings, with plans to continue increasing their workforce: Crowdstrike, Fortinet, NetSkope, Palo Alto Networks, Splunk and Zscaler seem to be hiring big time.
At this time of year, when most of the other sectors in the industry are on hiring freeze or very slow in hiring, the cybersecurity industry is pretty healthy, which is largely driven by the software security need that has arisen due to remote working.
3. Acquisitions are still thriving.
Some of the most notable acquisition announcements in the cybersecurity space this year are as follows:
1. Palo Alto Networks announced the acquisition of The Crypsis Group for $265 million.
2. Microsoft announced its acquisition of CyberX, with sources projecting the value of the acquisition at roughly $165 million.
3. Zoom acquired end-to-end encryption company Keybase.
4. Palo Alto Networks announced it will acquire CloudGenix for $420 million.
This trend suggests that data breach response and risk management, cloud apps security, encrypted data transfer and IOT security are in demand.
Zoom, which has experienced a dramatic period of growth in 2020 because of the pandemic, was also victim of security issues. Ths led Zoom CEO to apologize for its security problem. To remedy this, Zoom implemented a 90-day "get well" plan, which included the acquisition of an end-to-end encrypted chat and cloud storage system company Keybase.
4. Security Startups are slowly being founded in 2020.
At the time of writing this, roughly 65 cybersecurity startups have been founded in 2020, according to data via my Crunchbase Pro account. It has definitely not been an upward trend as I see the number was at about 165 in the first eight months of 2019, but still comparing other industries, it seems to be faring OK.
With this trend for the coming years, cybersecurity is going to be a key driver in the stock market.
Looking Ahead
It's been predicted that the cybersecurity market could reach $400 billion by 2026. While the pandemic has impacted just about every industry, cybersecurity is in a unique position to accelerate innovation and growth.
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