Solar Seven
A series of recent cyberattacks on U.S. businesses has brought cybersecurity back into the spotlight.
For example, UnitedHealth Group (UNH) is still recovering from a ransomware attack on its Change Healthcare unit that ultimately crippled administrative functions at hospitals, clinics and pharmacies across the country. Health insurance companies are forced to $22 million paid to cybercrime group Regain access to their system.
Also making headlines in recent months is 23andMe (ME), which experienced a security breach last fall that affected the profiles of about 7 million users. The hackers are believed to have gained access through leaked login credentials.
In late May, it was revealed that data cloud giant Snowflake (NYSE:SNOW) was also hit, with hackers using compromised login credentials to steal the data of 165 million potential customers. Earlier this month, Live Nation (LYV) confirmed that its Ticketmaster unit had also been hit by a cyberattack.
Which brings us to today’s cybersecurity investor question: What is the No. 1 cybersecurity threat facing businesses today?
We asked Stone Fox Capital’s SA analysts Mark Holder and Julian Lin what they saw as the most pressing threats.
Tag holder: While the traditional threat from cybercriminals is stealing sensitive corporate data, such as credit card numbers and customer identities, a greater threat to businesses now is the current trend of ransomware. Cybercriminals are increasingly using ransomware to shut down corporate networks and steal data, requiring a fee to restore the data and get the business back up and running. Companies face lost sales from network outages and the cost of paying for ransomware.
Cybersecurity Ventures estimates that total annual ransomware losses will reach $265 billion by 2031, with the current average cost of a ransomware attack being at least $10 million. Rubrick (NYSE:RBRK) has seen significant growth in this threat space recently, and the stock is one of the more reasonably valued cybersecurity stocks on the market right now.
Julian Lin: Generative AI may increase the urgency for companies to improve their cybersecurity protections, creating a potential greenfield for cybersecurity companies to compete against the market share of traditional vendors. This might help explain some names like CrowdStrike (NASDAQ: CRWD) and Zscaler (NASDAQ: ZS) continues to post incredible revenue growth, and there doesn’t appear to be any sign that the economy is about to slow down.
