A huge IPO is coming to market next week: The McAfee IPO is expected to launch on Oct. 22.
Shares of the cybersecurity company could soar on its Nasdaq debut.
Don’t wait for this next $10 billion IPO.
McAfee is a household name in the world of cybersecurity.
The company was founded by John McAfee in the 1980s. Its software became the standard antivirus and security software installed on most PCs.
Today McAfee software protects over 600 million devices.
Here are McAfee’s key financial results for 2019:
- Revenues of $2.6 billion
- Cash profits of $799 million
McAfee saw decent 9% growth in sales last year. And cash profits known as EBITDA grew by 48%.
The company may be benefitting from an increase in remote work. That’s because companies are deploying computers and devices to allow their employees to work from home.
People working from home don’t have the protection of a secure office network. And that may be driving demand for cybersecurity solutions offered by McAfee.
McAfee IPO: Its Second Initial Public Offering
This will be the second time that McAfee goes public. In the first McAfee IPO, it went public in 1999 and raised $75 million. In 2011, Intel (NASDAQ: INTC) bought the entire company for $7.7 billion.
Six years later in 2017 Intel brought a partner into the deal. Private equity firm TPG Capital bought a 51% stake in McAfee in a deal valued at $4.2 billion.
This year, the McAfee IPO is expected to price on Oct. 21 and will begin trading the next day.
The McAfee IPO price is expected to be $19 – $22 per share. And the stock will trade as MCFE.
The transaction is expected to raise $759 million at a $9.6 billion market capitalization.
That means TPG Capital will realize more than a 100% profit in three years.
Both Intel and TPG plan to sell shares of their stock as part of the transaction. This is their way of taking money off the table and lock in profits.
Insiders like TPG prefer to buy PRIVATE shares. And when a company goes public, they cash out and lock in huge profits.
These deals are known as Pre-IPOs. Go here to see how simple it is to get started.
Buy or Sell?
McAfee had net income of $31 million in the first half of 2020.
This suggests that the McAfee IPO price values the company at around 155 times net income.
This seems like a hefty price tag for the stock. Plus, the fact that insiders are selling stock means they think the valuation is rich.
Additionally, McAfee has considerable debt on its balance sheet. Total long-term debt is $4.7 billion.
I’m planning to watch the McAfee IPO when it starts trading. And it wouldn’t be surprising if the stock jumped in its first day – just like most new IPOs.
However, I’m not going to chase this new IPO.
Frankly, I’m far more excited about this electric vehicle Pre-IPO. And it’s expected to start trading by the end of October.
Yours in Wealth,