UK cyber company faces investors amid market turmoil, Telecom News, ET Telecom


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London: UK cybersecurity firm Darktrace came under close scrutiny from investors on Wednesday due to dramatic swings in its stock prices since its IPO on the London stock market.

Darktrace, based in the English university town of Cambridge, has held its annual general meeting amid growing unrest over the stock.

The company, which uses cutting-edge artificial intelligence (AI) technology to fight cyberattacks, entered the London Stock Exchange in April.

The initial public offering was launched at 250 pence per share, valuing Darktrace at £ 1.7bn ($ 2.3bn, € 2.0bn).

Shares then climbed higher over the following weeks and months to peak nearly 1,000 pence in September.

Darktrace also joined London’s prestigious FTSE 100 Index of Top Companies last month.

But shares then fell after brokerage firm Peel Hunt questioned its valuation and technology.

On Wednesday afternoon, shares fell 3.25% to 482.60 pence, valuing Darktrace at £ 3.4 billion.

However, this was still about double the introductory price and the initial value of the business.

Darktrace nevertheless now faces a potential relegation of the FTSE 100 club from the London Stock Exchange.

A shareholder at Wednesday’s AGM complained that a director of Darktrace had sold a large amount of stock as the stock price slipped, sending a “mixed message” to the markets.

Another investor argued that Darktrace did not invest enough money in research and development, unlike its US competitors.

Still, the company retorted on Wednesday that it had generated “strong” profits in a critical year.

“After delivering strong full year results and successfully completing our IPO, 2021 has so far been a turning point in Darktrace’s journey,” said President Gordon Hurst.

Annual revenues rose 41 percent to $ 281 million, he added, with a similar hike forecast next year.

Darktrace was founded eight years ago and has since grown rapidly to serve more than 5,900 customers in over 100 countries, with a global workforce of 1,600.

CMC Markets analyst Michael Hewson said it remained a “decent” company with solid prospects.

“Its IPO price was 250 pence – and it’s still way above it,” Hewson told AFP.

“The drops from the 1,000 pence high seem striking – but are symptomatic of concerns about a high valuation after a recent brokerage note.

“Even with the recent declines and the possible downgrade of the FTSE 100, it’s still a decent deal with good prospects.”

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