Unexpected Boon for FEYE Stock
Despite all the hype around cybersecurity, most firms don’t yet consider it a necessary cost of doing business. Just look at FireEye Inc (NASDAQ:FEYE). As the company’s sales growth sputtered to a standstill, the value of FEYE stock collapsed.
It didn’t matter that revenue was 34% above the same quarter a year before. (Source: “FireEye Reports Strong First Quarter Results as Growth of Platform Billings Accelerates,” FireEye Inc, May 5, 2016.) Investors assumed all companies were bound to adopt threat protection software, so they bid up the price of FEYE stock to include that assumption. The stock was valued for mass adoption, so anything short of spectacular growth is bound to cause trouble.
With that in mind, I think some high-profile security breaches are exactly what the industry needs.
Think about it: it’s a shock when major institutions get hacked. To see the internal emails of the Democratic National Committee (DNC) sprawled across every newspaper makes for entertaining reading, but it should worry every organization that wants to protect its data. These hackers broke into the DNC with ease.
Seeing that happen is a rude awakening. It reminds us that we’re all vulnerable to a cyberattack. Companies need to see that to understand that the threat is real, persistent, and potentially harmful. It can’t be ignored any longer.
DNC Leak Could Be the Tipping Point for FEYE Stock
Data breaches are almost a daily occurrence. Not too many people know that nearly every defense agency, think-tank, and lobby group in Washington, D.C. has been hacked. Those stories tend to slip beneath the radar, but the DNC leak was big news.
It got a ton of attention—which might be great for FEYE stock. The e-mails showed the DNC coordinating with the Clinton campaign during each primary. In essence, the DNC was supposed to be neutral in this race, but it wasn’t. It’s that simple.
Within a day, the head of the DNC was forced to resign. That’s a heavy price to pay for inadequate security, to work your way up the ladder only to get axed over a few damaging e-mails. It’s a bitter pill to swallow.
I’m sure there were dozens of CEOs watching that and thinking, “What if my e-mails leaked online?” These kinds of attacks remind people that cybersecurity is the cost of privacy. Whether it’s e-mails or patents, you have to pay to keep secrets safe—that’s simply a fact.
Unfortunately, companies are slow to realize it. Sooner or later, they won’t have a choice, though. The cost of not getting a cybersecurity solution will become too high. After all, data is valuable—but only when it’s exclusive. That’s the crucial point that virtually guarantees a rebound in FEYE stock.
You’ll Regret Not Going Bullish on FEYE Stock
Imagine you’re running a business that sells specialty medical devices. The value of your company isn’t in the physical products, but in the patents that protect your market share. No one can make a similar product because they don’t have the schematics.
You hear about this company called FireEye. They have software protections that could prevent hackers from gaining access to your data, but it seems like an unaffordable luxury. You’d rather spend that money on expanding your business.
So you pass on FireEye’s products and open a second factory instead. Everything seems to be going well—that is until you suffer a cyberattack. These hackers can access your customer data, financial records, and, worst of all, your patents.
Suddenly a whole host of copycats are releasing generic versions of your medical devices at prices you can’t match. Your sales plummet. The second factory needs to be closed and sold off at a loss, which completely crushes your cash flow.
The Bottom Line on FEYE Stock
Before you know it, you’re filing for Chapter 11 bankruptcy and it’s all because you weren’t willing to spend a little cash on protecting your assets. That is the nightmare scenario for most companies, but it’s going to be a catalyst for FEYE stock.
The inevitable consequence of continuous attacks on high-profile organizations is that more and more companies will buy cybersecurity products. This could push FireEye’s growth numbers back up and, in turn, send FEYE stock through the roof.