Israeli IPOs a bigger hit than much-heralded Alibaba

The Chinese e-retailer’s shares perform respectably on IPO day, but Israel’s offerings far outshine them

CyberArk staff and Nasdaq officials celebrate the company's IPO in June 2014 (Photo credit: Courtesy)
CyberArk staff and Nasdaq officials celebrate the company's IPO in June 2014 (Photo credit: Courtesy)

Over the past two months, Israeli IPOs have been the top three performing new stock issues on the NASDAQ exchange, leaving behind a bigger name from a much bigger country — China’s Alibaba. The three – MobilEye, ReWalk, and the latest, CyberArk – doubled or tripled in value from their initial strike price. CyberArk, an Israeli cyber-security firm, saw its shares nearly double by the end of its first trading day last Wednesday, and analysts applauded the performance of one of the first of the new Israeli cyber-security start-ups to go public.

CyberArk shares went on sale last Wednesday, September 24, at a strike price of $16, rising at one point during the day to over $32 a share, before settling back down to the $30 range. As of Friday, CyberArk shares were valued at $29.80 — 86% over the strike price.

The performance of the Israeli IPOs has been far better than that of the most heralded and anticipated initial public offering of the year – Chinese e-retailer Alibaba Group. Shares in Alibaba were offered on September 19 at $68, and rose on their first day about 30%, to $90.46. Since then, the stock has hovered at a level slightly below $90, as analysts cite investor fear of the prospects of China’s economy in the mid-term as an important factor in the relative lack of enthusiasm the Alibaba IPO generated.

First in the latest round of the Israeli IPOs was MobilEye, which went public on August 1. Shares were priced at $25 at the opening bell, but investors drove share prices up to as much as $39.40, with shares closing on the first day of trading at $37, 48% higher than the initial asking price.

Already at the time, it was the largest Israeli IPO in the US ever. According to analysts, the $890 million raised by MobilEye gives the company a valuation of over $7.5 billion. But as investors have gotten to know MobileEye, which makes safety systems for drivers, they have driven share prices even higher – to the point where shares closed at over $50 last Friday, 104% over the original share price.

The money will give MobileEye the opportunity to develop the next generation of its system — turning drivers into passengers, using “driverless technology.” MobilEye uses a monocular camera, which magnifies images, together with sophisticated software that calibrates how much time a drive needs to brake in order to avoid colliding with the vehicle ahead. If the driver gets too close, an alarm goes off, and in some vehicles, the software is connected to the braking system — so that if the driver fails to brake in time, the system does it for him.

Performing even better has been ReWalk Robotics, the Israeli developer of an exoskeleton system that enables the paralyzed to walk. Offered at a modest strike price of $12 on September 12, ReWalk shares quickly shot up. As of the weekend, ReWalk’s shares are selling for $31 apiece – 158% more than they did on their first day.

ReWalk allows independent, controlled walking similar to that of an able-bodied person, with computers and motion sensors doing the “heavy lifting.” The system controls movement using subtle changes in center of gravity, mimics natural gait and provides functional walking speed, enabling even paraplegics to move independently — and even to run marathons, as a paralyzed woman did in 2012.

ReWalk was personally reviewed last year by US President Barack Obama on his visit to Israel in 2013. The system was part of a special exhibition called “Israeli Technology For a Better World” at the Israel Museum, which highlighted seven of Israel’s most important tech contributions. The system was developed by Dr. Amit Goffer, an Israeli inventor who became quadriplegic after an ATV accident in 1997. It was through his own personal experience in utilizing mobility devices for people with spinal cord injuries that Goffer developed the ReWalk. “The person walks the system, the system does not walk them,” Goffer said. “The users are in control — when they want to sit, they sit, when then want to stand and walk, they do so.”

CyberArk specializes in protecting “privileged accounts” on corporate servers, according to Chen Bitan, Manager of CyberArk Israel. “According to international research firm Deloitte, 100% of sophisticated attacks used privileged accounts to get into critical systems. We prevent attacks simply by choking off access to these accounts, denying hackers the opportunity to use them to break into systems,” Bitan told the Times of Israel in a previous interview.

“Our system isolates the privileged session from the rest of the network and keeps it away from the system until it is thoroughly analyzed,” said Bitan. “Thus, all work sessions using accounts CyberArk monitors remain isolated, and the credentials for an account – its password, etc. — remain isolated as well, so even if a hacker is copying the data using a keylogger or other malware, the only data they can access is that of the session itself, and not anything more on the server.”

All three IPOs are associated with up and coming industries. MobileEye specializes in computer vision and big data applications; ReWalk is a leading company in advanced medical device technology; and CyberArk is a top company in cyber-security, which analysts see as an important emerging tech opportunity for Israel. According to Jerusalem Venture Partners, which owns a 37.7% stake in CyberArk, there are over 200 cyber-security start-ups in Israel, far more than anywhere else in the world except the US – and many of them are working on advanced technology, as CyberArk is.

CyberArk – and Israel – are well-positioned to take advantage of the growing concern over cyber-security issues in the business world, according to NASDAQ Vice-President Nelson Griggs. “Security is top of mind for every organization, and the need for innovative solutions is high. CyberArk is a pioneer in the privileged account security space and helps companies defend against cyber-attacks. We are honored to have CyberArk listed on The NASDAQ Stock Market and we look forward to celebrating many milestones with them in the years to come.”

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