Major hacks, data breaches, and a rise in global cybercrime damages are seemingly responsible for a surge in the share prices of some publicly-traded cybersecurity companies.
The Cybersecurity Stock Report, published quarterly by Cybersecurity Ventures, notes the PureFunds HACK ETF -- which covers 35 cyber firms -- is up 35 percent since February 2016, when it hit a low for the year.
Some investors, analysts, and market-watchers track the HACK fund's performance as a barometer for the overall cybersecurity stock market.
Andrew Chanin, CEO at PureFunds, points to several factors which may be nudging investor interest in his HACK ETF -- including the recent hack on Yahoo, major breaches at LinkedIn, DropBox, and Snapchat, and an uptick in ransomware damages in the healthcare sector.
Another measuring stick for the cybersecurity industry is the BVP Cyber Index which tracks 30 publicly-traded cyber companies from January 2011 up through the current month October 2016. BVP Cyber has been markedly outperforming the NASDAQ, S&P, and Dow Jones indexes, and lists 19 companies with market caps exceeding $1 billion.
Chanin speculated earlier this week that M&A is on the horizon in the cyber and defense sectors. He appears to be right on the money. Accenture (NYSE:ACN) announced today they have entered into an agreement to acquire Defense Point Security, LLC (DPS), a privately held cybersecurity company that supports the U.S. federal government with advanced cyber defense and response capabilities—including advanced Security Operations Center (SOC) expertise, cyber operations, security engineering, and cyber analytics. DPS will become a wholly owned subsidiary of Accenture Federal Services (AFS).
A Profit Confidential story explains why Symantec -- sitting atop the BVP index with a market cap of $17.6 billion -- is a massive stock growth opportunity and can gain 20 percent with the acquisition of Blue Coat Systems now under its belt.
The CSO Cybersecurity Business Report Blog recently predicted that cybercrime damages will cost the world $6 trillion annually by 2021 (up from $3 trillion last year) and cybersecurity spending will exceed $1 trillion cumulatively over the next five years from 2017 to 2021. If these predictions come true, then major growth opportunities lie ahead for some publicly-traded cyber firms. For privately held cybersecurity startups and emerging growth players, it could mean they become lucrative acquisition targets.