Yahoo Finance Rubrik's Successful IPO Puts These ETFs in Focus
Microsoft-backed cloud-based cybersecurity firm Rubrik RBRK achieved a successful initial public offering on Apr 25, with its stock price increasing 17% on its debut day, closing at $37. The stock added 2.41% after hours. The firm has a valuation of about $6.49 billion.
Rubrik's IPO topped expectations, pricing shares at $32, above the high end of the expected range, and opening for trading at $38.60. The upsized IPO raised $752 million for Rubrik's expansion plans, valuing the company at $5.6 billion.
Notably, Rubrik's valuation has steadily increased, with a Series E round in January valuing the company at $3.3 billion, up from $1.8 billion in 2017. Microsoft made an equity investment in Rubrik in 2021 in a financing round. Venture capital firms Greylock Partners and Lightspeed have also backed the company.
ETFs in Focus
The market debut of Rubrik could pave its entry into a number of ETFs in the coming days. Investing in IPO ETFs could be a compelling way to enter the IPO business without directly investing in individual companies. Plus, the stock may be included in several cybersecurity and cloud-computing ETFs that align with the space Rubrik operates in.
These ETFs include IPO funds like Renaissance IPO ETF IPO and First Trust US Equity Opportunities ETF FPX, cybersecurity funds like First Trust NASDAQ Cybersecurity ETF CIBR, Amplify Cybersecurity ETF HACK and iShares Cybersecurity & Tech ETF IHAK, and cloud funds like Global X Cloud Computing ETF CLOU and Fidelity Cloud Computing ETF FCLD.
Investors should note that the recent developments indicate that the IPO market has been opening up. The recent successful IPOs of Reddit Inc. (RDDT) and Astera Labs Inc. (ALAB) last month have strengthened the IPO market. Both companies not only met but exceeded their IPO fundraising targets and experienced gains in their initial trading. And now, Rubrik, too, has joined the winning group.
Let’s delve a little deeper into Rubrik's strengths and weaknesses.
Inside Rubrik's Strength
The fast uptake of cloud applications for storing and transferring data has exposed businesses to Internet-based malicious attacks, thereby enhancing the demand for cybersecurity firms.
Palo Alto, CA-based Rubrik provides data security solutions to more than 6,100 customers. Its clientele includes behemoths like appliance maker Whirlpool, snacks and beverages giant PepsiCo and investment bank Goldman Sachs.
Proven Track Record of Founder & CEO
Rubrik's success can be attributed in part to the leadership and vision of co-founder and CEO Bipul Sinha, whose background includes engineering positions at Oracle and IBM, as well as a venture capital career at Lightspeed Venture Partners.
Any Challenges Ahead?
Despite strong subscription revenue growth, Rubrik lacks profitability. There was a 40% increase in subscription revenues to $537.9 million for the 12 months ending Jan 31, 2024. But the company disclosed a loss of $354 million. This compared to a loss of $278 million for the 12 months ending Jan 31, 2023.
Sinha acknowledged the importance of achieving profitability but did not offer a precise timeline. Also, Rubrik faces stiff competition from data management and protection vendors, including Cohesity, Commvault, Veeam, IBM and Dell EMC, per a CNBC article.
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Amplify Cybersecurity ETF (HACK): ETF Research Reports
Renaissance IPO ETF (IPO): ETF Research Reports
First Trust US Equity Opportunities ETF (FPX): ETF Research Reports
First Trust NASDAQ Cybersecurity ETF (CIBR): ETF Research Reports
Global X Cloud Computing ETF (CLOU): ETF Research Reports
iShares Cybersecurity and Tech ETF (IHAK): ETF Research Reports
Fidelity Cloud Computing ETF (FCLD): ETF Research Reports
RUBRIK INC (RBRK): Free Stock Analysis Report
