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Crowdstrike results came out last night. They were very good.
However, the market already expected very good results, so the share price has hardly moved.
Perhaps in the same way we shouldn't expect too much when our results come out in 8 days.
The Darktrace price was 414 when Thoma Bravo made their offer to take over the company. The price had gone up about 40p in the two days beforehand, no doubt because of leaks, when it was perhaps 375.
Thoma Bravo took over Nearmap for a 39% premium on the price the day their announcement was made. Assume TB pay a 60% premium for DT on 375, that means they will want to pay no more than £6.
However, DT mysteriously said they had received "a number" of approaches. I think the only way we'll get more than £6 is if TB back out and DT accept a higher offer from elsewhere.
With apologies - I copied the Telegraph article twice. This is what steveberyl wrote. You'll have to judge what he says for yourself:
Dark Investors and Financial Media need to understand who and what Thoma Bravo actually are and where TB are in relation to Cyber Security. TB own Venafi, World leader in Electronic certification of Saas and delivery, automatically, without human interference. Something Dark can only dream about. TB paid $1.2 Bn for Venafi and TB also hols a tiny stake in Device Authority-Keyscaler both of these are deeply involved with Biden EO.
IMHO. Darktrace will be seen as the final piece that will deliver a complete package of Cyber security protection for the World Market, superseding every single Global currently offering similar products by White labelling Venafi/Device Authority.
He writes:
Many analysts argue Darktrace looks like a good deal to a private equity investor with plenty of dry powder. “It is still very cheap and still very below normal take out valuations,” says Alex Henderson, an analyst at Needham, which has a £10 price target on the company.
One investor puts a price tag of £8 per share, a little under £6bn overall, as the minimum Darktrace’s board should consider. Analysts Stifel estimate a takeover bid will come in at between £5.85 and £7.15. News of Thoma Bravo’s interest sent Darktrace’s share price surging 30pc this week to give it an overall value of £3.85bn.
Investors in Darktrace claim it is just another example of the London Stock Exchange failing to fairly value tech companies against their US peers, a personal bugbear of Lynch who believed Autonomy was rated too cheaply by the City.
“This just highlights the problem with investors on the London Stock Exchange who chronically undervalue growth companies,” says Hussein Kanji, an early investor in Darktrace at Hoxton Ventures.
Thoma Bravo’s interest could flush out further bidders. City sources cite Vista Equity Partners, a $93bn investor in the software sector, as a possible rival to Thoma Bravo. Vista declined to comment.
Tech giants could also look to combine Darktrace with their own technology. “If I were a strategic buyer like Cisco or Palo Alto Networks this would be a nice fit,” says Needham’s Henderson.
Analysts at Stifel add that “being private might actually be the better situation for Darktrace”. They write that ties to Autonomy have “prevented a number of public market investors” from buying the stock. One investor speculates Thoma Bravo could ultimately relist it in the US at a higher valuation.
Many analysts argue Darktrace looks like a good deal to a private equity investor with plenty of dry powder. “It is still very cheap and still very below normal take out valuations,” says Alex Henderson, an analyst at Needham, which has a £10 price target on the company.
One investor puts a price tag of £8 per share, a little under £6bn overall, as the minimum Darktrace’s board should consider. Analysts Stifel estimate a takeover bid will come in at between £5.85 and £7.15. News of Thoma Bravo’s interest sent Darktrace’s share price surging 30pc this week to give it an overall value of £3.85bn.
Investors in Darktrace claim it is just another example of the London Stock Exchange failing to fairly value tech companies against their US peers, a personal bugbear of Lynch who believed Autonomy was rated too cheaply by the City.
“This just highlights the problem with investors on the London Stock Exchange who chronically undervalue growth companies,” says Hussein Kanji, an early investor in Darktrace at Hoxton Ventures.
Thoma Bravo’s interest could flush out further bidders. City sources cite Vista Equity Partners, a $93bn investor in the software sector, as a possible rival to Thoma Bravo. Vista declined to comment.
Tech giants could also look to combine Darktrace with their own technology. “If I were a strategic buyer like Cisco or Palo Alto Networks this would be a nice fit,” says Needham’s Henderson.
Analysts at Stifel add that “being private might actually be the better situation for Darktrace”. They write that ties to Autonomy have “prevented a number of public market investors” from buying the stock. One investor speculates Thoma Bravo could ultimately relist it in the US at a higher valuation.
Darktrace has unique technology and a great future. That's why so many American companies are after it.
If we sell out now, we - we - lose the growth over the next few years which the Americans so want. Many of us will also be clobbered for capital gains tax.
But what if we merged with an American company like Crowdstrike and combined our resources? We would make much more money.
Too much to type in full, but it says:
"Darktrace's recent £2.8billion market value was 38 times its expected earnings before interest, taxes, depreciation and amortisation (Ebitda) in 2022, compared with 88 times for its US rival Crowdstrik, which is forecast to deliver similar Ebitda growth of around 18%, says Aimee Donnellan on Breaking News. "Taking the business private could help close that gap."
If Darktrace can deliver the average annual 30% revenue growth forecast over the next five years, it could be sold for over £11bn, equivalent to a "juicy" 32% internal rate of return."
(I presume that means sold on by Thoma Bravo in 5 years' time. )
If 32% is a realistic rate of growth, we would be mad to sell our shares. No wonder TB, Cisco, Crowdstrike and Palo Alto want them.
Also, if we sell our shares to TB, where do we reinvest the proceeds? We won't find any other company with such a rate of growth. Instead we are more likely to lose money. Just look at all the blue chip and other companies which have crashed recently - Meta, Glaxo, Cineworld, Bitcoin, S4Capital, Nvidea, Netflix, Alphabet, Amazon - the list is endless. I myself have no idea where to reinvest the money if I sold my Darktrace share. Darktrace is a great share to keep.
The Times says that a large shareholder considers that the company will be sold at an undervalue, and that its long-term prospects are very good.
I agree with that. Trouble is, what I and this large shareholder say counts for nothing.
The top 8 shareholders own 65% of the shares. Those 8 people will all be in contact with each other and they will decide everything.
It has been a difficult year for M&A and IPO activity, given the volatile stock market landscape. Perhaps a privatisation of Darktrace is the best way to avoid the uncertainty of this year’s market gyrations, with the potential to float the company once again in the coming years once confidence is restored in equities.
Last month, Darktrace shares jumped after it lifted its full-year profit margin forecast and said it anticipates revenue to jump nearly 50% versus last year. Darktrace has benefited from a surge in demand for cybersecurity this year amid the war in Ukraine and increased cyber threats. The company has managed to secure a number of major corporate clients including AB inBev, which has boosted the top and bottom lines. However, this positivity hasn’t been reflected in its share price with the stock down significantly since last October after a downbeat analyst note.
I piled in first thing this morning. I frantically sold everything which wasn't Darktrace at 8.10am (apart from one dud I'm stuck with) and put all the proceeds into Darktrace, at £4.95.
My reasoning is that I think Thoma Bravo will pay about £7 per share within the next three months, so the almost certain jump from £4.95 to £7 makes it a wonderful bargain.
Getafgrip - we can't read the article because we are not subscribers to the FT. What does the article say in summary?
Now is a good time for American predators to buy the best UK companies, because the dollar is strong and share prices for tech shares have dropped such a lot and are at bargain levels.
Bear in mind that Investors Chronicle on 10 June 2022 said that it thought Darktrace shares are worth between £5 to £6. If the results are very good on 8 September, the shares may be worth £7. I'm sure the Darktrace board will be aware of this when they negotiate with TB.
In June this year Thoma Bravo bought a company called Anaplan for a 41% premium
Earlier this month it bought Ping Identity for a 63% premium
In April this year it bought Sailpoint for a 48% premium
The companies it buys then become privately owned by TB. They are kept for 4 to 5 years, then sold on at a profit.
Perhaps this is why the price went up today.
https://www.bbc.co.uk/news/technology-62506039
It's just come out. There's been a bigger than expected rise in employment. The American FED doesn't want that. It wants a recession to reduce inflation, but the jobs report shows that's not happening.
It means the FED will have to increase interest rates even more. That's bad for tech stocks, and explains why Darktrace share price just suddenly dropped by 6p.
There's just been a discussion on CNBC about the cybersecurity stocks. They've all gone up today. Crowdstrike 3%, SentinelOne 6%, Palo Alto 3%, Zscaler 3%, OKTA 7% and Darktrace 5%.
It's all to do, says CNBC, with the USA/China dispute over Taiwan. Chinese hackers are perhaps the best in the world, and they may attack the utility companies in the USA, the government departments there, the military and businesses. If so, there will be a big spike in American and Taiwanese companies buying cybersecurity products.
However, that does suggest that tomorrow Darktrace share price may drop because of profit taking.
I wonder if it has anything to do with the takeover by Norton of Avast today.
An article from Simply Wall Street dated 29 July says:
"According to the 8 industry analysts covering Darktrace, the consensus is that breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of US$3.7m in 2024. So, the company is predicted to breakeven approximately 2 years from today. "
However, Investors Chronicle of 10 June says: "In September 2021 the forecast consensus was for a pre-tax loss of £20mn-25mn even by 2024, but today, following positive trading updates, consensus is now for profits of £20mn-£25mn."
If the profits are over £25 million, the share price will soar.
https://www.fool.co.uk/2022/07/04/can-the-darktrace-share-price-make-an-explosive-comeback/