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Introduction

Fortinet (FTNT), a constituent in our Pure-Play Cybersecurity Software Stocks Portfolio, plunged during the week ending August 8 triggered by a mix of disappointing guidance, analyst downgrades, and concerns about growth sustainability..

What Are Cybersecurity Companies?

Cyber security companies train their models with data from previous attacks to create autonomous systems that can detect if an attack is ongoing based on certain readings. As a result that increases companies’ lead time for an attack and allows them to prepare mitigation and response strategies. Video: How AI is changing the cybersecurity landscape.

Why Is There A Need For Cybersecurity Companies? 

Cyber attacks have skyrocketed in the past year, with the average number of weekly attacks climbing 75% globally year-over-year (56% in the U.S.), and, as such, businesses, governments and individuals are racing to protect themselves from these threats. Research forecasts that corporate spending on cybersecurity should grow at a CAGR of 13.8% between now and 2030 (source) and, for investors, this means that companies developing cutting-edge technology to secure networks and data could be positioned for explosive growth and be excellent long-term buys.

Key Catalysts Behind the Decline in Fortinet Last Week

1. Q3 revenue guidance fell short of Wall Street hopes, raising concerns about slowing momentum,

2. Multiple firms, including Roth Capital, MKM Partners, Evercore ISI, Jefferies, and Morgan Stanley, slashed price targets and downgraded the stock that cast doubt on Fortinet’s ability to maintain its historical growth trajectory

Our Pure-Play Cybersecurity Software Stocks Portfolio

eSecutityPlanet.com provides a list of cyber security companies (see here) of which the 5 largest of those companies (i.e. +$20B  market capitalization) that focus exclusively on the development and provision of cyber security software are highlighted below in regards to the market capitalization of each, and how each constituent performed week-ending August 8th, in ascending order, in July, and YTD. 

1. Fortinet (FTNT): DOWN 25.5% w/e August 8th; DOWN 3.1% in July; DOWN 21.3% YTD
   • Market Capitalization: $57B
2. CrowdStrike Holdings (CRWD): DOWN 6.6% w/e August 8th; DOWN 9.0% in July; UP 24.1% YTD
   • Market Capitalization: $106B
3. Zscaler (ZS): DOWN 5.6% w/e August 8th; DOWN 9.4% in July; UP 49.5% YTD
   • Market Capitalization: $42B
4. Palo Alto Networks (PANW): DOWN 3.8% w/e August 8th; DOWN 13.4% in July; DOWN 8.2% YTD 
   • Market Capitalization: $112B
5. Check Point Software Technologies (CHKP): UP 1.3% w/e August 8th; DOWN 14.0% in July; UP 1.0% YTD
   • Market Capitalization: $20B

Summary

Our Pure-Play Cybersecurity Software Stocks Portfolio was DOWN 2.2% w/e August 8th, and DOWN 13.9% in July, but remains UP 14.1% YTD. 

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