How to Invest in Rubrik (RBRK)

As cyberattacks threaten the private and public sectors, cybersecurity is increasingly in demand. If you're an investor seeking cybersecurity exposure, you may be wondering how to buy Rubrik (RBRK 3.26%) stock.

Since 2014, Rubrik has grown into a leading provider of cybersecurity solutions that encompass data protection, data threat analytics, data security posture, and cyber-recovery. The company is led by two of its co-founders: Bipul Sinha serves as both Rubrik's CEO and chairman, and Arvind Nithrakashyap is Rubrik's chief technology officer (CTO).

To the delight of investors interested in fortifying their portfolios with Rubrik stock, the company debuted on the New York Stock Exchange on April 25, 2024. Rubrik's initial public offering (IPO) was priced at $32 per share but opened at $38.60.

The appeal of cybersecurity providers like Rubrik is understandable, considering the significant risk cyberattacks represent. To help protect the data of more than 6,100 customers, Rubrik has partnered with tech industry leaders.

Rubrik helps customers using Microsoft (MSFT 0.73%) Azure to store data in the cloud and numerous other uses. For businesses that have turned to Amazon (AMZN 3.2%) for cloud-based data services, Rubrik has solutions to ensure cybersecurity.

Investors with an eye on Rubrik stock have several things to consider. Those include how to buy shares of Rubrik, the degree to which the company is profitable, whether it pays a dividend, and whether alternative investment opportunities exist.

How to buy

How to buy Rubrik

If you've been waiting to become a Rubrik investor, it's now possible to buy the company's stock. Whether you're familiar with how to invest in stocks or buying shares of Rubrik will be your first experience with buying stock, there are basic steps to gain exposure to Rubrik, which now trades on the New York Stock Exchange under the stock ticker RBRK.

Step 1: Open a brokerage account

Before buying shares of Rubrik or any stock, new investors must have access to a brokerage account. Opening a brokerage account is easy, and many choices are available to investors. People without a lot of (or any) investing experience may want to consider a brokerage account from Fidelity, which offers commission-free online stock trades.

Step 2: Figure out your budget

Once you've opened a brokerage account, the next step is to review your finances and decide how much you'd like to allocate toward buying stock. You may decide that buying the stock in a single acquisition is a good strategy, or you may prefer to build a position with small purchases over time.

Step 3: Do your research

You may not have a term paper due, but that doesn't mean you can skip the research. Plenty of resources are available online for investors to investigate potential stock picks.

Step 4: Place an order

Each brokerage's user interface is a little different, but you'll need to navigate to the trade option and enter the ticker symbol. Then, you'll specify either how many shares you want to buy or how much money you want to invest in fractional shares.

Investors will notice the option to place either a market or a limit order. A market order tells your broker to execute the trade immediately for whatever the stock's price is at the time of the trade. However, the market price could fluctuate wildly. The Motley Fool generally recommends a market order.

Should I invest?

Should I invest in Rubrik?

There's no single answer as to whether Rubrik is a smart investment. Like most investing decisions, it's complicated. On the one hand, Rubrik will strongly appeal to growth investors. The company reported a 47% year-over-year increase in its subscription annual recurring revenue (ARR).

Moreover, the company isn't overly reliant on any one customer for its subscription ARR, which helps to mitigate its risk. Of its more than 6,100 customers, 99 represent a subscription ARR of $1 million or more, and 1,742 customers represent a subscription ARR of $100,000 or more.

However, investors uninterested in more speculative investments may want to steer clear of Rubrik. While the company has achieved impressive growth in its subscription ARR -- from $153 million in Q1 2022 to $784 million in Q4 2024 -- it remains unprofitable. And there's no certainty it will achieve profitability in the near future.

Additionally, stocks that make new appearances on public markets can exhibit considerable volatility. For those with a more conservative leaning, other cybersecurity stocks or even a cybersecurity exchange-traded fund (ETF) may be a better fit.

Profitability

Is Rubrik profitable?

With Rubrik submitting its S-1 filing in advance of its IPO, investors have a clearer sense of what the company is generating on the top line, the bottom line, and every line in between. Rubrik isn't profitable at this point.

The company earned a gross profit of $482.9 million in fiscal 2024 (its fiscal year ends on Jan. 31), up from $417.8 million in 2023. It also improved its gross profit margin -- from 70% in 2023 to 77% in 2024. But the company reported a steeper net loss of $354.2 million in fiscal 2024, up from its $277.7 million net loss in 2023.

Dividends

Does Rubrik pay a dividend?

At this time, Rubrik doesn't pay a dividend, and it's unlikely the company will begin to reward shareholders anytime in the near future. The company states in its S-1 that it does "not anticipate paying any cash dividends in the foreseeable future."

ETF options

ETFs with exposure to Rubrik:

Rubrik recently became a publicly traded stock, but investors can also gain exposure to the company through an exchange-traded fund (ETF). For instance, investors can gain exposure to stocks like Rubrik through a cybersecurity ETF.

• First Trust Nasdaq Cybersecurity ETF (NYSEMKT:CIBR): With approximately $6.4 billion in assets under management, the ETF includes 32 holdings found in several industries -- software, communications equipment, and semiconductor manufacturers, among others -- and all have exposure to cybersecurity. The fund's three largest holdings are Broadcom (AVGO -0.34%), CrowdStrike Holdings (CRWD 2.74%), and Infosys (INFY 0.6%), which represent 6.7%, 6.0%, and 5.8% of the fund, respectively. The fund has a 0.6% expense ratio, and holdings are rebalanced quarterly.
• Wisdom Tree Cybersecurity Fund (NYSEMKT:WCBR): Although it has only about $72 million in assets and 26 holdings in the fund, the Wisdom Tree Cybersecurity Fund offers investors exposure to some of the most prominent cybersecurity companies. In addition to CrowdStrike (the largest position), SentinelOne (S 0.28%), Palo Alto Networks, and Varonis Systems are among the top eight holdings. The fund has a 0.45% expense ratio.
• Global X Cybersecurity ETF (NYSEMKT:BUG): According to Mirae Asset Group, the fund's manager, the Global X Cybersecurity ETF invests in companies that may prosper as cybersecurity technology adoption grows, "such as those whose principal business is in the development and management of security protocols preventing intrusion and attacks to systems, networks, applications, computers, and mobile devices." In addition to common names like CrowdStrike and Palo Alto Networks, the ETF counts top cybersecurity names like Zscaler (ZS 2.36%) and Fortinet (FTNT 2.63%) among its 24 holdings. The fund has net assets of $764 million and an expense ratio of 0.51%.

Stock splits

Will Rubrik's stock split?

Oftentimes, companies will elect to split their stocks when they sense that the share prices have soared so high that investors are reluctant to purchase them. Although there are a variety of upcoming stock splits in 2024, Rubrik will almost definitely not be one of them.

Related investing topics

The bottom line on Rubrik

With Rubrik gaining considerable attention -- and investment dollars -- from Microsoft, it's not surprising that investors are interested in picking up shares themselves. And they won't have to wait any longer, as the company held its IPO in April.

It's worth noting that as of early 2024, the Department of Justice was pursuing a fraud investigation into Rubrik stemming from allegations of employee misconduct. Citing sources familiar with the matter, Reuters reported that the company is cooperating with the investigation.

Now that the stock is trading, investors looking for cybersecurity exposure can buy shares of Rubrik or opt for a cybersecurity ETF that provides more broad exposure to the industry.

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