Monday has been another bad day for the Darktrace (LSE: DARK) share price. This tech stock plunged again, despite by the cyber-security firm releasing no regulatory or corporate news. So what’s going on?
The Darktrace share price slumps again
The last three weeks have been pretty painful for the Darktrace share price. As I write on Monday afternoon, it has plunged to 211.5p, down almost a sixth (-16%) since Friday’s close. What’s more, the stock has lost 28% since closing on Tuesday, 10 January.
Here’s how this popular UK tech stock has performed over the short term:
| Five days | -14.6% |
| 2023 YTD | -20.5% |
| Six months | -43.6% |
| One year | -48.1% |
Founded in 2013, Darktrace listed in London at a share price of 250p, valuing the group at £1.7bn. After falling below its listing price, the group is now valued at just over £1.5bn. Darktrace shares are down by more than a fifth in 2023 so far, plus they have almost halved over one year.
Then again, at its peak, the Darktrace share price soared to an all-time high just over £10 on 24 September 2001. That’s roughly five times its current level. Alas, shares in the Cambridge-based cyber-defence firm have crashed by almost four-fifths (-78.9%) from their peak. Ouch.
Darktrace shares are a roller coaster
The Anglo-American cyber-security group uses artificial intelligence to identify and prevent hacking attempts and other security threats to organisations’ IT networks. Though its yearly revenues are growing fast, the company remains loss-making — as with most young tech groups.
Once a member of the blue-chip FTSE 100 index, Darktrace’s plunging market capitalisation has relegated it to the mid-cap FTSE 250 index. Yet its machine-learning approach to cyber-security puts it at the cutting edge of British tech firms.
I know of no public reason for today’s sharp price slide. But Darktrace is one highly volatile stock. Its price quadrupled in just five months (from April to September 2021), before crashing back by almost four-fifths.
Also, its price chart shows a steep spike last summer, when it was briefly the subject of a mooted cash takeover bid by Thoma Bravo. When the private-equity giant pulled out on 8 September, the Darktrace share price crashed by around 30% and now stands about 60% lower.
Heavy selling pressure?
In a recent trading update on 11 January, the company warned that new customer sign-ups were slowing in “challenging macroeconomic conditions“. It also cut revenue forecasts, but increased its forecast for earnings margins.
If I had to guess what drove down Darktrace shares today, I’d probably plump for sustained selling pressure. Perhaps a major shareholder is in the process of selling a hefty stake, thus depressing the market price? Who knows? Not me.
For the record, I don’t own Darktrace shares and I wouldn’t buy at current price levels. The Darktrace share price is just too volatile for me as an older value/dividend/income investor. Thus, I’ll leave these shares for younger, bolder traders!
