Cybersecurity firm SentinelOne (NYSE: S) has seen its stock skyrocket today by close to 18%. A positive earnings call yesterday certainly didn’t hurt, but it seems to be news of an acquisition that is driving the stocks price skywards.
What does SentinelOne do?
SentinelOne is a California-based cybersecurity startup that was founded in 2013. The company went public late last June via IPO, raising $1.2 billion. The firm utilizes its proprietary ‘Singularity’ platform to provide a whole host of security features rooted in artificial intelligence. SentinelOne offers autonomous threat prevention, detection, and response capabilities in a veritable one-stop shop for businesses’ cybersecurity needs.
Why is SentinelOne stock up today?
SentinelOne announced the impending acquisition of fellow cybersecurity firm Attivo Networks. The deal is valued at $616.5 million and will be a cash and stock transaction. The deal is expected to close by the end of SentinelOne’s fiscal second-quarter pending regulatory approval. In describing the acquisition, SentinelOne COO, Nicholas Warner, stated,
“The shift to hybrid work and increased cloud adoption has established identity as the new perimeter, highlighting the importance of visibility into user activity. Identity Threat Detection and Response (ITDR) is the missing link in holistic XDR (Extended Detection and Response) and zero trust strategies.”
To try and break that down a little, this purchase will effectively allow companies using SentinelOne to monitor individual users within their ecosystems more carefully. Unusual user activity can be detected quicker, allowing for earlier detection or prevention of potential security threats. This is one area that had been missing within SentinelOne’s suite of tools.
So, should I buy SentinelOne stock?
Investors certainly saw this move as bullish, with the company trading up 17% at the time of writing today. The company also posted a solid earnings call yesterday, beating analyst expectations for earnings — posting a loss per share of $0.17 against an expected loss of $0.18 — while also outpacing estimates in its outlook for the coming year.
Despite being in direct competition with companies like Crowdstrike, SentinelOne has already carved out a niche for itself in the cybersecurity space. The firm offers a product that is more user-friendly and with a much gentler learning curve. It also arguably has more room to grow than its biggest competitor does having only gone public less than a year ago.
Despite a premium valuation, and no guarantees that it can continue to compete in such a competitive market, SentinelOne is showing clear signs of future growth. It’s most certainly a company to watch over the coming months, and if things keep progressing as they have been recently, it could make a welcome addition to a growth portfolio.
Financial Writer at MyWallSt
Pádraig’s favorite stock is Nike. Growing up as a sports fanatic, seeing Nike collaborate with athletes like Jordan, Lebron, and Ronaldo inspired him and cemented the brand in his mind. Now, despite having failed miserably in his attempts to earn a fabled Nike sponsorship, he still believes in the innovation and creativity behind Nike and is convinced they will only grow stronger as the world's leading sports brand.