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Lifelock Inc (NYSE:LOCK) Surges as Investors See Attractive “Lifetime Value”

lifelock inc ftc investigation

Lifelock Inc shares surged on this mornings market after an announcement on Tuesday wiped out half of the firm’s market cap. The FTC says that the firm isn’t living up to its end of a 2010 order on data security. The firm has said that it will contend that allegation in court, and some traders are backing that fight on Wednesday.

lifelock inc ftc investigation

At time of writing shares in the identity theft security firm are up by more than 6 percent to $8.65. Shares began trading on Tuesday July 21 at more than $16, but lost 49 percent for the day’s trading after the FTC announced its findings against the firm.

LifeLock will fight on

A group of Wall Street banks came out in support of Lifelock on Tuesday afternoon. Deutsche Bank analyst Nandan Amladi kept a Buy rating on the firm, but said that its dealings with the FTC could “take longer to resolve” than previously thought.

Josh Beck of Pacific Crest wasn’t so sure about the firm’s future. He put a price target of $8 on the firm’s shares and said that the risks of the FTC move would make traders look away from the firm’s “attractive customer lifetime value.”

Lifelock, in a statement released on Tuesday, said it was proud of the “valuable service we provide to our members.” The firm said that it disagreed with “the substance of the FTC’s contentions and are prepared to take our case to court.”

Amladi of Deutsche Bank may think that “the stock losing half its value is an overreaction and unjustified,” but Rob Breza of Wunderlich reckons that the FTC issue “will slow the pace of gross new member” ads, meaning a slow down in the short term at the very least.

That court battle is likely to be the driving force for the stock going forward, and Wall Street is lining up to pick a side. In the mean time many traders who were previously unaware of the business are getting involved in order to bet on the future of the firm.

LifeLock trading gets heavy

Lifelock Inc will be an interesting stock for traders going forward because of the volatility that the FTC case will bring. The firm’s trading volume on Wednesday morning was three times the average less than an hour after the markets opened in New York.

The Tempe, Arizona, based firm sells software that that is supposed to protect the identity of those that pay for it. It does this by monitoring the use of a user’s identity across the web and with credit agencies. It detects whether user information turns up on data leaks on black market sites and other networks known for identity theft.

The FTC battle has brought a lot of new traders to Lifelock stock, and the glut of Wall Street reports on the $800m firm are fueling a massive increase in trading.

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