Expert weighs in on Google parent’s historic US$23bn buyout offer

InvestorDaily

Google’s parent company Alphabet is in talks to acquire cloud security start-up Wiz. If finalised, the proposed US$23 billion buyout would not only be the largest in Alphabet’s history but also the second-largest in the cyber security sector, trailing only Cisco’s US$28 billion purchase of Splunk in 2022. The offer made by Alphabet is nearly double Wiz’s recent valuation of US$12 billion, and a whopping 65 times the firm’s annual recurring revenue in 2023 (US$350 million). In a conversation with InvestorDaily, Global X investment strategist Billy Leung pointed out multiple factors contributing to the substantial gap between Wiz’s valuation and the proposed acquisition price, and suggested that similar undervaluation issues may be affecting other businesses in the cyber security sector.

“I think for one, obviously, there is a mispricing of general cyber security stocks, especially those in the US,” Leung highlighted. “But number two, it’s the scarcity value.” In particular, Google is aiming to significantly enhance its cloud security capabilities by integrating Wiz’s advanced technology. Leung explained that capabilities like those offered by Wiz are in short supply and, as such, are highly sought after.

The rest of this article can be found at investordaily.com.au.