Is FireEye Now Incapable of Capitalizing Off Hacking Fears?

By Chris Lange Published Nov 5, 10:55AM EST

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FireEye Inc. (NASDAQ: FEYE) missed earnings when it reported Tuesday after the close, and it has been feeling the pain ever since. The company reported a net loss of $0.51 per share and $114.2 million in revenue. It beat consensus estimates on the bottom line by $0.04 but missed on the top line by about $2 million.

The company gave guidance for the full year of $418 million to $430 million in revenue, which was down $5 million only on the low-end of the range. Thomson Reuters has a consensus estimate of $428.42 million in revenue for the full year.

FireEye is still expected to lose money this year. Consensus estimates of analysts are for -$2.13 in earnings per share for 2014 and -$1.82 per share for 2015. The market is known for wiping out companies that continue to lose money year after year. So, the question remains, is FireEye capable of capitalizing off these hacking fears? And how much does it have to make to not continue posting losses?

The long and short of the matter is that this cybersecurity firm is feeling more pressure now that investors are expecting continued and even accelerated growth in the wake of the Home Depot and J.P. Morgan hacks. It is worth noting that this company is massively propped up by international data hacks, and the spending environment around these hacks account for the majority of its growth in 2014.

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Year over year, FireEye grew revenues about 168%, but considering the increased demand for cybersecurity firms and analyst calls, even this gain was not enough to please investors. Looking ahead, investors are pricing in future earnings and revenues into the current price, but this hiccup could signal more than just slowing growth.

Shares of FireEye were down 16% at $28.77 after the first hour of trading, after a 1.6% gain from Tuesday, with more than 11 million shares traded in the first hour and premarket sessions combined. FireEye shares had a consensus analyst price target of $42.25 and a 52-week trading range of $24.81 to $97.35.

About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.