CISO Global, Trend Micro, Okta Hardest Hit

Cybersecurity companies took Monday’s sell-off on the chin, with CISO Global, Trend Micro and Okta experiencing significant stock price drops in Wall Street’s worst day since 2022.

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The Nasdaq Composite Index fell nearly 3.5% Monday amid concerns about Friday’s dismal jobs report, spurring fears that the U.S. economy is on shaky legs. The bleeding has been just as bad in cybersecurity, with 12 publicly traded cybersecurity vendors faring worse than the Nasdaq Composite Index Monday. Ten companies fared better and the stock price rose for one cybersecurity vendor – CrowdStrike.

“Such a rapid rise in unemployment in the past has often been associated with an abrupt slowing of economic growth,” UBS economists wrote Monday in response to the U.S. unemployment rate surging to 4.3%, according to CNN.

Nonetheless, there are signs relief is on the way. Inflation resumed a downward trend, unemployment rose last month to its highest point since October 2021 and the Federal Reserve gave some key hints at its policy meeting last week that it will likely cut rates in September, CNN reported. Interest rates are currently at a 23-year high, and some analysts think the Fed hasn’t acted quickly enough to lower rates.

“The market panic appears disproportionate,” wrote EY chief economist Gregory Daco in a note to clients Monday, according to CNN. “In our opinion, the core issue lies with the Fed being behind the curve, in action and in thought, rather than a significant economic downturn.”

Monday was just the 15th time in the 128-year history of the Dow Jones Industrial Average that that it fell by more than 1,000 points in a single day, according to CNN. The Dow’s worst drop in history, measured by points, came in the early days of the pandemic: It fell 2,997 points on March 16, 2020, a decline of 12.9%. The worst stock market crash ever came on Oct. 19, 1987, when the Dow fell 22.6% (see: A Few Cybersecurity Stocks Soared in 2022, But Most Stumbled).

Security Stocks Hit Hard in Sell-Off

No cybersecurity company fared worse than Phoenix-area CISO Global. The company’s stock fell 10.7% to $0.39 per share as of mid-afternoon Monday, which is the lowest the company’s stock has ever traded since going public in June 2020. The second-worst performance belonged to Tokyo-based Trend Micro, which experienced a 5.14% drop in stock prices to $43.75 per share, which is the lowest the company’s stock has traded since June 20. Japan’s Nikkei 225 index nosedived 12% – its worst rout in history – after the Bank of Japan raised interest rates and plans to taper bond buying.

Taking the bronze for worst security stock performance Monday was San Francisco-based Okta, whose stock fell 4.43% to $82.85 per share, which is the lowest the company’s stock has traded since Feb. 22.

Other cybersecurity companies whose stock fared worse than the Nasdaq Monday include BlackBerry, Hub Security, OneSpan, Rapid7, Rubrik, SentinelOne, Tenable, Varonis and Zscaler. Conversely, the 10 companies that outperformed the Nasdaq Monday include Akamai, Check Point, Cloudflare, CrowdStrike, CyberArk, Fortinet, Palo Alto Networks, Qualys, Radware and Secureworks.

One cybersecurity vendor was the lone exception, notching an increase in its stock price on Monday. CrowdStrike’s stock climbed 1.91% to $222.05 per share Monday after the company rejected claims of misconduct and negligence made by Delta Air Lines over a global IT outage caused by a flawed CrowdStrike software update, saying “any liability by CrowdStrike is contractually capped at an amount in the single-digit millions.” CrowdStrike’s stock is down 35% since the outage that struck Microsoft Windows-based users on July 19.

Experts warned that the sell-off could be an overreaction.

“We are hesitant to take the July jobs numbers as a new trend,” Goldman Sachs chief economist Jan Hatzius wrote in a note to clients, according to CNN. “It is usually a mistake to infer too much from one jobs report, absent a major shock that abruptly changes the picture.”