Tenable IPO vs. Facebook's Flop: Identifying a Stock Market Trend

Today, I share a tale of two stocks. First, there’s Tenable Network Security ($TENB), the third cybersecurity firm to go public this year. This Columbia, Md.-based company, whose software helps defend corporate networks from digital attacks, follows Zscaler’s terrific market debut in March and Carbon Black’s equally admirable coming out party in May. Like its predecessors, which popped upon their introductions, Tenable made a stunning entrée on its first day of trading: shares surged by nearly a third to just above $30 per share on Thursday. One couldn’t hope for a better reception.

Indeed, the cybersecurity market rally shows no signs of flagging. As Tenable CEO Amit Yoran told CNBC, “As long as cybersecurity remains one of the foundational issues of our time, we believe that there will continue to be tremendous appetite in the market for understanding what your risk and exposure looks like.” There’s something to Yoran’s conviction, even if he is simply talking his own book.

Now, the counterpoint: the collapse of Facebook’s market value just a day prior to Tenable’s IPO. The media titan issued a weak earnings report on Wednesday, revealing slowed user and revenue growth and warning of chilled expectations for the foreseeable future. Investors, spooked, fled, wiping well over $100 billion off the company’s market cap. The ensuing nosedive erased all of the stock’s gains year-to-date.

What with fake news, the Cambridge Analytica scandal, GDPR—you name it—it’s been a rough year for Zuckerberg & Co. To this columnist’s eye, Facebook’s travails and Tenable’s triumph serve to remind that cybersecurity, and its close cousin privacy, are gaining in the estimation of consumers. The trajectory of these two stocks—one soaring, the other spiraling—demonstrates how businesses cannot ignore data protection without repercussions any longer. Those who have moved fast and broken things must stoop now to pick smashed pieces off the floor.

These market trends are good news for cybersecurity firms gearing up for the next highly anticipated IPOs: CrowdStrike, Tanium, and Cylance, among them. Investors’ enthusiasm for data-protecting businesses seems to swell even as the wrath loosed on companies that foul up amplifies. Mark the markets’ invisible hand, for it gestures.