There was a time when FireEye Inc (NASDAQ:FEYE) was regarded as one of the more promising companies in the cybersecurity space and for a good reason. The company had its IPO back in 2013, but over the past half a decade, the stock declined steadily and gone down by as much as 70% during the period.
That being said, considering the fact that the stock is trading at 50% of its IPO price, some investors might still believe that there is value in the FireEye. Hence, it could be worthwhile to look closely at the stock and figure out whether it is on the verge of bottoming out.
Major Analysis
The company’s threat detection products had actually won awards back in the day and seemed destined for big things. However, soon after its IPO in 2013, FireEye plunged into chaos. The company diluted its shares in order to make a large offering in 2014, and the following year its CFO left the company. A year later, the CEO resigned as well.
In the meantime, the competition from CISCO and Palo Alto Networks made the situation tougher for FireEye. However, the new CEO, Kevin Mandia, made important changes to the company’s operations.
Mandia streamlined the business, introduced a cloud-based subscription service, and moved away from on-site products. These efforts finally bore fruit, and in Q1 2020, it generated revenues of $225 million. It beat analysts’ estimates of $222 million and net loss as per non-GAAP principles narrowed to $.02 a share.
The company stated that Q1 revenues only declined by ‘less than $2 million’ due to the coronavirus crisis. However, billings fell by as much as 7% year on year to $170 million. That is a worrying trend since it could mean lower growth in revenues for the rest of the year.
The company has projected that revenues could decline by 0% to 2% in the next quarter. At this point, FireEye is growing slowly in an industry that is well known for its fast growth. Moreover, the talks of a takeover by CISCO have died down amidst the coronavirus crisis. Hence, the risks might not be particularly great in the FireEye stock, but investors looking for growth might do well to consider its rivals.
