Wiz burst onto the cybersecurity scene a few years ago. Founded by Assaf Rappaport in 2020, Wiz hit $100 million in annual recurring revenue (ARR) within 18 months. Its ARR has continued soaring, reaching $350 million by the end of 2023. The company has a grand ambition to grow its ARR to more than $1 billion in the future.
The company's revenue growth (and focus on cloud security) caught the attention of tech titan Alphabet (GOOG 0.45%)(GOOGL 0.42%). Its Google subsidiary offered to buy Wiz for $23 billion in 2024. However, Wiz turned down the offer, opting instead to continue building the company independently and eventually pursue an initial public offering (IPO).
Image source: Getty Images.
Given its rapid growth and Google's interest, Wiz will likely be a hot IPO. Here's a look at everything you need to know about investing in the pre-IPO company and some cybersecurity stock alternatives to consider while you wait for it to go public.
Is it publicly traded?
Is Wiz publicly traded?
As of mid-2024, Wiz wasn't a publicly traded company. It was a private venture capital-backed startup. Several notable firms have invested in Wiz, including Andreessen Horowitz, Lightspeed Venture Partners, Thrive Capital, Greylock Partners, Salesforce (CRM -1.23%) Ventures, Sequoia Capital, and Blackstone (BX -0.93%).
IPO
IPO (Initial Public Offering) is the first sale of stock by a private company to the public, making it a publicly traded entity.
Will it IPO?
When will Wiz IPO?
Wiz was working to put its IPO on the calendar in mid-2024. The company walked away from a $23 billion acquisition offer by Google in July 2024. It reportedly turned down the deal to pursue an IPO. It aims to grow its ARR to $1 billion and then go public (its ARR reached $350 million in 2023). Wiz is on track to reach that goal by the end of 2025, suggesting an IPO could come in early 2026.
How to invest
How to buy Wiz stock
Since Wiz is still a private company, you can't buy its stock with a brokerage account. However, accredited investors (i.e., those with a high net worth or high annual income) can sometimes purchase pre-IPO shares of companies like Wiz on a secondary marketplace like Forge Global (FRGE -4.35%), Hiive, and EquityZen.
Meanwhile, non-accredited investors will need to wait for Wiz to go public before they can buy shares. In the meantime, they can consider investing in a competing cybersecurity company. Here are three top cloud security companies to consider while you await Wiz's IPO:
Crowdstrike Holdings
Crowdstrike Holdings (CRWD 0.01%) is a leading cloud security platform. The company's Falcon platform uses artificial intelligence (AI) to detect threats and stop breaches. It has 28 cloud modules that enable customers to consolidate their security with one vendor. The cybersecurity provider ended its fiscal 2025 first quarter with almost $3.7 billion of ARR (up 33% from the prior year). It's scaling its business to $10 billion in ARR and beyond.
Palo Alto Networks
Palo Alto Networks (PANW 8.29%) is the world leader in cybersecurity. The company's best-in-class cybersecurity platforms and services use industry-leading threat intelligence and boast state-of-the-art automation. The company's innovative approach enables it to provide next-generation cybersecurity services to customers worldwide. The Palo Alto Networks next-gen security platform had almost $3.8 billion of ARR in mid-2024 (up 47% year over year). It aimed to grow its platform towards $15 billion in ARR by its 2030 fiscal year.
Zscaler
Zscaler (ZS 1.51%) is a cybersecurity pioneer. It built the Zscaler Zero Trust Exchange from the ground up to securely connect individual users, devices, and applications. The leader in cloud security had more than $2 billion in ARR as of mid-2024 (and delivered 48% revenue growth in its 2023 fiscal year). It was targeting to grow its ARR to more than $5 billion in the future.
Anyone can buy shares of one of these Wiz alternatives through a brokerage account. Here's a step-by-step guide on how to invest in stocks.
Step 1: Open a brokerage account
You'll need to open and fund a brokerage account before you can invest in any company. If you still need to open one, here are some of the best-rated brokers and trading platforms. Take your time researching the brokers to find the best one for you.
Step 2: Figure out your budget
Before making your first trade, you'll need to determine a budget for how much money you want to invest. You should only invest money you won't need for the next three to five years. You'll then want to decide how to allocate that money. The Motley Fool's investing philosophy recommends building a diversified portfolio of 25 or more stocks you plan to hold for at least five years.
You don't need to get there immediately. For example, if you have $1,000 available to start investing, you might want to begin by slowly allocating that money equally across at least 10 stocks. You can grow your portfolio from there as you have more money to invest.
Step 3: Do your research
It's essential to thoroughly research a company before buying its shares. You should learn about how it makes money, its competitors, its balance sheet, and other factors to make sure you have a solid grasp on whether the company can grow value for its shareholders over the long term. You should also research related companies like Crowdstrike, Palo Alto Networks, and Zscaler.
Step 4: Place an order
Once you've opened and funded a brokerage account, set your investing budget, and researched the stock, it's time to buy shares. The process is relatively straightforward. Go to your brokerage account's order page and fill out all the relevant information, including:
- The number of shares you want to buy or the amount you want to invest to purchase fractional shares.
- The stock ticker (CRWD for Crowdstrike, PANW for Palo Alto Networks, or ZS for Zscaler).
- Whether you want to place a limit order or a market order. The Motley Fool recommends using a market order since it guarantees you'll be able to buy shares immediately at market price.
Once you complete the order page, click to submit your trade and become a shareholder in one of these cybersecurity stocks while you wait for Wiz to go public. You would follow a similar process to buy an IPO stock like Wiz when it does finally go public. Once shares become available, fill out the order page at your brokerage account with the cybersecurity company's selected stock ticker and submit your trade.
Profitability
Is Wiz profitable?
The privately held Wiz doesn't need to publicly disclose its financial results, so there isn't much publicly available information on its profitability.
The company is reportedly growing its revenue briskly. It was the fastest-growing company in history in 2022, achieving $100 million in ARR less than 18 months after its founding. It more than tripled that number in 2023 to $350 million. Wiz was working towards reaching $1 billion in ARR, which it aims to hit by the end of 2025.
The company likely isn't profitable yet. According to an article by CNBC, a Wiz spokesperson said the company is "emphasizing smart growth over profitability." However, with low sales and marketing spending compared to its revenue, Wiz could reach profitability quickly as it grows its revenue.
Investors interested in Wiz should take the time to review its IPO prospectus when it becomes available. They should see if the company has reached profitability or is at least on the path to making money because profit growth tends to drive a stock's performance over the long term.
Should I invest?
Should I invest in Wiz?
Since Wiz isn't public yet, you have lots of time to decide if you want to buy shares at its IPO. Here are some reasons why you might want to invest in the cybersecurity company:
- You think Wiz will grow its revenue and profits briskly in the future.
- You think the company will grow into a leader in the cybersecurity industry.
- You want to invest in a founder-led company.
- You think Wiz has better products and services than its cybersecurity sector rivals.
- Investing in Wiz would help diversify your portfolio.
On the other hand, here are some reasons why you might opt against buying Wiz at its IPO:
- You're not sure what Wiz does.
- You're concerned about growing competition in the cybersecurity sector.
- You're at or nearing retirement and would prefer to invest in more mature companies.
- You already own other cybersecurity stocks.
ETFs
ETFs with exposure to Wiz
Since Wiz isn't a publicly traded company yet, you can't use exchange-traded funds (ETFs) to gain passive exposure to the cybersecurity company. However, you can use ETFs to invest in the cloud security trend. Here are three top cybersecurity ETFs to consider investing in while you wait for Wiz to go public:
- First Trust NASDAQ Cybersecurity ETF (CIBR 0.61%): This ETF tracks the Nasdaq CTA Cybersecurity Index. The fund had 29 holdings in mid-2024, including Palo Alto Networks (second-largest at 8.5% of its net assets), Crowdstrike Holdings (fifth-largest at 5.8%), and Zscaler (10th-largest at 3.9%). The fund had a 0.59% ETF expense ratio.
- Amplify Cybersecurity ETF (HACK 0.55%): The fund was the first cybersecurity ETF when it launched in 2014. It had 24 holdings in mid-2024, including Palo Alto Networks (third-largest at 6.6%) and Crowdstrike Holdings (ninth-largest at 4.2%). The ETF had a 0.6% expense ratio.
- iShares Cybersecurity and Tech ETF (IHAK 0.54%): The Blackrock (BLK -0.97%)-managed ETF focuses on cybersecurity and technology companies. The fund had 34 holdings in mid-2024, including Palo Alto Networks (ninth-largest at 4.2%). It had a 0.47% expense ratio.
Related investing topics
The bottom line on Wiz
Wiz is one of the hottest companies in the startup world. It's one of the fastest-growing companies because its cybersecurity solutions are in high demand. That caught the attention of Google, which tried to buy the company. However, Wiz plans to stay the course and go public in the future. Given its growth, it could be one of the hotter IPOs when it launches, which makes it an exciting company to watch.
FAQ
Investing in Wiz FAQ
Can I invest in Wiz?
Most people can't invest in Wiz yet. It was a private company backed by venture capital funds. However, shares of pre-IPO companies often trade on secondary markets like Forge Global, Hiive, and Equity Zen. Unfortunately, only accredited investors (i.e., those with a high net worth or high income) can buy shares on those platforms.
Is Wiz a publicly traded company?
As of mid-2024, Wiz wasn't a publicly traded company. It was a private company backed by venture capital funds and other investors. However, it is planning to go public in the future.
What is the ticker symbol for Wiz?
Wiz wasn't a publicly traded company as of mid-2024, so it didn't yet have a stock ticker symbol.
Is Wiz profitable?
There wasn't much publicly available financial information on Wiz in mid-2024. It's unclear if the company was profitable yet. However, it is growing its revenue rapidly, which should put it on the path towards profitability.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Matt DiLallo has positions in Alphabet, Blackstone, CrowdStrike, Palo Alto Networks, Salesforce, and Zscaler. The Motley Fool has positions in and recommends Alphabet, Blackstone, CrowdStrike, Palo Alto Networks, Salesforce, and Zscaler. The Motley Fool has a disclosure policy.
