Cybersecurity is an important industry in the world today as online crime statistics rise. In the past few years, almost all companies are investing heavily to guard their resources.
They do this by partnering with one or more companies that provide these services. Similarly, there are cybersecurity companies that focus on individuals.
In this article, we will explain how to invest or trade cybersecurity stocks.
Cybersecurity market size
The cybersecurity industry has grown rapidly in the past few years. In the past, this industry was only known for the antivirus solutions that it used to provide. Recently, however, the industry has grown as cybersecurity has gotten more sophisticated.
Studies estimate that revenue of the biggest cybersecurity companies is expected to reach $173 billion in 2023. This is a big increase considering that these companies made $112 billion in 2019.
And analysts expect that the cybersecurity sector will continue rising and reach a whopping $262 billion in 2027.
It is easy to understand why the cybersecurity industry is growing. For one, all companies are now digital in one way or the other. For example, a company like Walmart has numerous sophisticated IT systems across its organization.
Further, most people are now using technology more than ever. For example, people these days shop online more than they did in the past few years. As a result, companies like Amazon, Walmart, and Target need to invest heavily in cybersecurity to ensure that their users are protected.
Types of cybersecurity companies
Cybersecurity companies are not created equal. As the industry has grown, a number of types of these companies has come up. The most popular types of cybersecurity companies are:
- Mobile security companies – These are firms that provide security solutions for mobile devices like smartphones and tablets. Examples of these are Skycure and Appthority.
- Anti-fraud and identity management – These are companies that prevent fraud and promote identity management. They include firms like Ravelin and IdWall.
- Predictive intelligence – These companies use artificial intelligence to predict when an event will happen and protect it. They include Cylance and CrowdStrike.
- Behavioral analytics – These firms provide behavioral analytics to prevent threats. They include companies like DarkTrace and RedLock.
- Cyber-risks management – These are analytics firms that provide risk management solutions for companies.
Top cybersecurity stocks to trade and invest
There are many cybersecurity stocks that you can invest in or trade. Some of the most popular ones are:
- Crowdstrike – This is a company that uses AI to detect and prevent events in companies. Its customers include Goldman Sachs and CreditSuisse.
- Fortinet – This is one of the biggest companies in the industry with a market cap of over $46 billion. Its customers include IBM and Microsoft.
- Splunk – This is a company valued at over $17 billion. It uses big data to prevent crime. Its three key solutions are Splunk Platform, Splunk Solutions, and Customer and Partner solutions. It has over 15,000 customers.
- Cisco – Cisco provides networking solutions. As part of its offerings, the company provides network solutions to thousands of customers internationally.
- Check Point Software Technologies – The company has a total market cap of over $16 billion. Its products are sold to governments and companies. They include firewalls and VPNs among others.
- SentinelOne – The company has a market cap of over $5 billion. It provides an artificial intelligence solution for companies/
Other popular cybersecurity companies that you can trade are Tenable Holdings, Qualys, and Norton LifeLock among others.
###Top cybersecurity ETFs
Another way to invest in cybersecurity is to allocate cash to ETFs. The most popular cybersecurity ETFs are the First Trust Nasdaq Cybersecurity ETF, Global X Cybersecurity ETF, iShares Cybersecurity and Tech ETF, and WisdomTree Cybersecurity Fund.
Examples of cybercrime in businesses
There are several types of cybercrime in businesses and other organizations. These types include:
- Phishing – This is one of the most common and the most dangerous. It involves a situation where a manager receives an impersonated email with a link. Criminals then use this link to gain access to a company’s systems. Other types of phishing are spear phishing, HTTPS phishing, and pharming among others.
- Malware infection – This is a situation where a computer or network is infected by a virus, trojan, or worm that is hard to remove. In most cases, cybercriminals demand ransom to remove these threats in networks.
- Data breach – This is a situation where hackers gain access to a company’s network and demand ransom. If they are not paid, they then move ahead and release the information.
- Denial of Service (DDoS) – This is a situation where hackers attack the functionality of a website. They mostly do this by sending a large volume of data to a website and overwhelm it.
- Cryptojacking – With cryptocurrencies growing in popularity, another form of cybercrimes is one that many people don’t notice. It involves hijacking a computer network and using it to mine cryptocurrencies.
- Cybersquatting – This is a situation where hackers create similar websites and steal from customers.
How to trade a cybercrime disclosure
Publicly-traded companies are required to disclose material information to their investors and customers. A hacking event is a material situation. Therefore, in most cases, a stock will often decline sharply after a company discloses a major hack situation.
There are several ways to trade this news. First, you can buy the dip, depending on the severity of the news since investors tend to first overreact when here are negative headlines. In most cases, companies hit by cybercrime tends to recover.
Second, you can invest or trade companies that help deal with the solution. In most cases, investors tend to move to companies that help address key cybercrime issues.
Third, in addition to companies in the cybersecurity industry, you can focus on cybersecurity ETFs. These are funds created to track companies in cybersecurity companies.
Cybersecurity is an important industry in the world today. In this article, we have explained some of the top reasons why the industry matters. We have also assessed some types of cybersecurity companies and how to take advantage of the sector.
External useful resources about Cybercrime trading
- How 4 Chinese Hackers Allegedly Took Down Equifax – Wired