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Behind Equifax's Data Breach: The Scope for FireEye and Peers

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Part 12
Behind Equifax's Data Breach: The Scope for FireEye and Peers PART 12 OF 21

How FireEye and Peers Could Be Impacted by Cybersecurity Attacks and New Laws

Cyberattacks’ impact on cybersecurity stocks

Only a couple of months ago, the entire world was reeling from the WannaCry and Petya ransomwares. These sophisticated cyberattacks and ransomware problems have become a real part of our day-to-day lives—and in the businesses of FireEye (FEYE) and other cybersecurity players like Symantec (SYMC).

Although these cybersecurity attacks boost the share prices of cybersecurity stocks, they usually lead the victimized company’s share price to fall. According to a study done by Comparitech and cited by Fortune, among 24 hacked companies, share prices fell 0.43% on average on the day of public disclosure of the attack.

How FireEye and Peers Could Be Impacted by Cybersecurity Attacks and New Laws

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But the impact is typically more profound in the long run. The study showed that three years after a cyberattack, the stock prices of the victimized companies were behind the tech-heavy NASDAQ index by an average of 40 percentage points. Thus, the expected long-term impact of a data breach on stock prices is far-reaching.

According to Laila Khudairi, head at Tokio Marine Kiln, companies’ stock prices suffer more than just after an attack because the companies have to go public about the attack before they have tackled and defeated it.

Cybersecurity funds consumption

The above presentation shows where the security funds go. Although hardware and software are crucial in security, the majority of spending finds its way to services like outsourcing and consulting.

According to Gartner, spending in the cybersecurity space is expected to surge from the estimated $86 billion in 2017 to $108 billion in 2020.

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