LifeLock, Inc. (NYSE: LOCK) has done an about-face for investors when you consider how important personal identity theft protection is right now. After a double-digit drop on Monday, the identity protection service provider’s stock has been cut in more than half from its 52-week high. The question is not just what is going on here… investors will want to know if this marks the bottom or something worse yet to be seen.

LifeLock’s catalyst for a 15% drop was the news that the identity theft service is suspending its LifeLock Wallet mobile app. Apparently it failed to meet some security standards. What is interesting is that it appears that no major breaches have been detected. This is just an embarrassment for the company – one which it cannot really afford considering that it is into personal security features for the public.

Sterne Agee’s Robert Breza, the firm’s analyst covering LifeLock, maintained a Buy rating with a $26 price target. Breza said that no date was provided regarding the expected return to operation, once it is in compliance with standards. Breza also said that the Federal Trade Commission was informed of the situation and the company expects further information requests regarding the matter.

Breza further said,

“Although we believe that the impact on our consensus numbers of the contribution of the application will be insignificant due to the clear separation between LifeLock Wallet business and its Identity Protection Services, the headline risk is a negative for the stock as these issues likely imply shortcomings in the due diligence process prior to the acquisition of Lemon Wallet in December 2013 for $42.6M in cash… Downloaded more than 3.6 million times prior to its acquisition, the Wallet app digitally stores and provides easy access to information regarding credit and debit cards, identification cards, insurance cards and loyalty cards, and also allows for credit card use tracking and cancellation. Lemon technology is also used as the mobile platform to offer legacy identity protection services to subscribers on mobile devices, in particular to respond to potential fraud alerts.”

So, the news is known, and shares are down over 15% at $10.98 on more than 6-times normal trading volume of 10.4 million shares with almost two hours until the close. The 52-week range is $9.50 to $22.85, and the consensus price target without this impact was listed as $23.75.

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In a more general sense of drops and recoveries, drops of this magnitude are very rarely met with any snap back rallies. The 15% drop is one thing, but it is a worry considering how much the FTC inquiries and customer acquisition costs have been a weight against the company.

This stock priced its IPO at $9.00 per share in October of 2012, under the $9.50 to $11.50 range at the time. The stock hasn’t broken that level in a while, but its 52-week low is $9.50.

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