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Can FireEye Stock’s Upward Journey in 2017 Continue?

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2017 has been good to FireEye

So far in 2017, FireEye (FEYE) stock has been on an upward journey, primarily because the cybersecurity space is considered “hot” under the new Trump administration. FireEye stock has risen nearly 9% YTD (year-to-date).

This is especially good news for the company’s shareholders and investors because the stock lost more than 40% value in 2016.
FEYE billings

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FireEye’s slowing growth and financials in 2016

As you can see in the chart above, FireEye’s 3Q16 revenues rose ~12.5% YoY (year-over-year), as compared to~45% in fiscal 3Q15, clearly indicating that the company’s YoY growth is slowing at a rapid pace.

Moreover, despite the low double-digit growth in revenues, FireEye’s billings increased only 2.3% to $215.4 million. When billings grow less than revenues, it’s viewed as an indication of slowing demand. FireEye’s slowing revenue and billings have been growing concerns that become magnified when company’s losses and cash flows are also taken into consideration.

In 3Q16, FireEye reported a loss of $0.75 per share, as compared to a loss of $0.88 per share in 3Q15. FireEye intends to produce positive free cash flow in 2017. However, given the company’s significant stock-based compensation expenses, investors will have to wait a long time before FireEye posts a profit.

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