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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