Shares of cybersecurity firm IronNet (IRNT) have fallen significantly since reaching their 52-week high at $ 47.50 on September 16. The stock is currently trading below $ 15. Can the stock bounce back as the business expands its reach? Read on to find out.
Cyber security firm IronNet, Inc. (IRNT) made its public debut on August 27, 2021, through Special Purpose Acquisition Company (SPAC) LGL Systems Acquisition Corp. The company made its flagship collective defense solution available to all businesses in Singapore in August 2021. The stock soared to its 52-week high at $ 47.50 on September 16, 2021, mostly because of the hype on social media.
However, like many other memes titles, it has plunged considerably since reaching its all-time high and is very volatile. The stock has lost 54.3% since reaching its 52-week high and 22% in the past month to close yesterday’s trading session at $ 12.99. The IRNT is still in its early stages of development and faces intense competition from other leading players in the cybersecurity industry. In addition, its turnover fell in the second fiscal quarter and its losses widened. Thus, its short-term outlook looks bleak.
Here is what could shape IRNT’s performance in the short term:
PSPC Enhanced Oversight
Several companies listed on the PSPC method have enjoyed immense popularity over the past year. However, the number of IPOs involving PSPCs plunged 87% from April to June compared to the first quarter of 2021 due to tighter regulations. Additionally, on September 22, U.S. Senator Elizabeth Warren and three other Senate Democrats sent letters to some of PSPC’s most prolific negotiators, expressing fears that PSPC insiders were exploiting regulatory loopholes in the country. detriment of retail investors. Thus, the IRNT could be impacted due to increased regulations concerning after-sales services.
IRNT’s revenue decreased 22.8% year-on-year to $ 6.10 million for the fiscal second quarter ended July 31, 2021. The average length of the company’s dollar contracts was 2.8 years , compared to 3.2 years in the quarter of the previous year. Its calculated non-GAAP billings decreased 52.7% year-over-year to $ 3.50 million. Its operating loss increased 19.7% year-on-year to $ 17 million. In addition, its net loss amounted to $ 17.20 million, up 20.3% year-over-year.
In terms of EBITDA margin over the last 12 months, IRNT’s negative 200.76% is significantly lower than the sector average of 14.68%. The stock’s last 12-month ROTC and ROTA are negative compared to industry averages of 4.75% and 3.56%, respectively. In addition, its FCF leveraged margin over the last 12 months is negative compared to the industry average of 12.58%.
POWR ratings reflect grim prospects
The IRNT has an overall rating of F, which equates to a strong sales rating in our POWR rating system. POWR scores are calculated taking into account 118 different factors, each factor being weighted to an optimal degree.
Our proprietary scoring system also rates each stock against eight different categories. IRNT has an F rating for growth and sentiment, in line with analysts’ expectations that its EPS will remain negative this year and next.
The stock has an F rating for value, consistent with its forward EV / S and P / S of 30.56x and 27.01x, above industry averages of 4x and 3.97x, respectively. In addition, the IRNT has a D rating for stability.
IRNT is ranked n ° 27 out of 28 stocks in the Software – Security sector. Beyond what I stated above, we have awarded IRNT ratings for momentum and quality. Get all IRNT notes here.
IRNT is an emerging player in the rapidly growing cybersecurity space and is known for IronDefense and IronDome. However, the stock has declined significantly since hitting its 52-week high. Moreover, analysts expect its EPS to remain negative this year and next. So the stock looks overvalued at its current price point and it is best to avoid it now.
How does IronNet (IRNT) compare to its peers?
IRNT has an overall rating of F. However, you can check these stocks in the same industry with an A (strong buy) or B (buy) rating: Radware Ltd. (RDWR), McAfee Corp. (MCFE) and NortonLifeLock Inc. (NLOK).
IRNT stock was trading at $ 13.03 per share on Thursday morning, up $ 0.04 (+ 0.31%). Since the start of the year, the IRNT has gained 28.75%, compared to an 18.62% increase in the benchmark S&P 500 during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in economics in college and has a passion for writing, which led to her career as a research analyst.
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