Shares Of Newly Public Company FireEye Have Gone Nuts, And They Have Turned This Man Into A Billionaire

Ashar Aziz FireEyeFireEyeAshar Aziz, founder, FireEye

In the past few days, shares of security company FireEye have gone absolutely bonkers, turning the company’s founder into an instant billionaire.

FireEye hit a high of $US96 at the close of market Wednesday, though they are dropping today, down to about $US92 at the time of publication.

Shares were up incredible 377% over its IPO price of $US20 from just six months ago, in September.

The spike is so tempting, the company will cash in with a secondary offering that hits on Friday. It’s selling another 5,582,215 shares. Should today’s price hold, that will put about $US514 million into its coffers, more than the roughly $US300 million it raised with its IPO.

Other stakeholders are cashing in, too. They will be selling 8,417,785 shares of their own. At $US92 a pop, these investors and execs will nab $US774 million.

All of it has been an insane ride for FireEye’s founder and largest stakeholder, Ashar Aziz.

He owns a 7.8% stake with 10,835,000 shares, worth just over $US1 billion when the share price reached $US93. He’s also one of the people cashing out, selling 1,043,904 of his shares, according to SEC documents.

The even bigger winners are VC firms Sequoia and Northwest Ventures, each with a roughly 15% stake and about 21 million shares.

So, what’s going on with FireEye? A few things:

  • The company’s flagship product solves a really hard computer security problem. It is able to stop hack attacks that were previously almost impossible to stop.
  • FireEye bought another security firm, Mandiant, for $US1 billion. Mandiant was famous for uncovering links between Chinese hackers and attacks on U.S. companies.
  • With Mandiant, FireEye launched a cloud computing security service that competes with SourceFire. SourceFire is the company Cisco bought last summer for $US2.7 billion.
  • The company beat expectations on its fourth quarter with revenue of $US57.3 million, a beat by $US1.26 million, and EPS of $US-0.35, a beat by $US0.03.
  • Some Wall Street analysts have been really gung ho on the company. Wells Fargo started tracking it a month ago, saying it was “a once in a decade opportunity to invest in a truly disruptive technology.”

But the high share price, and Aziz’s newfound billionaire status, might not last that long.

FireEye issued light guidance for its Q1 of $US70-$72 million and EPS of -$0.51 to -$0.56, below the $US76.2 million and -$0.37 EPS analysts wanted. And it issued light EPS guidance for the next full year of -$2.00 to -$2.20, well below what analysts wanted to hear, -$1.42.

Plus, share prices are starting to drop today already, thanks to this soon-to-come flood of new shares. Prices have dropped to just below $US92 so far, which makes Ariz’s stake worth just under $US1 billion.

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