Why LifeLock Is Poised to Underperform

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, identity theft protection company LifeLock (NYSE: LOCK  ) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at LifeLock and see what CAPS investors are saying about the stock right now.

LifeLock facts

Headquarters (founded)

Tempe, Ariz. (2005)

Market Cap

$683.8 million

Industry

Application software

Trailing-12-Month Revenue

$250.6 million

Management

Co-Founder/Chairman/CEO Richard Davis

CFO Chris Power

Trailing-12-Month Operating Margin

4.6%

Cash/Debt

$76.7 million / $62.6 million

Competitors

Equifax (NYSE: EFX  )

Intersections (NASDAQ: INTX  )

TransUnion

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 63% of the 19 members who have rated LifeLock believe the stock will underperform the S&P 500 going forward.

Just yesterday, one of those Fools, All-Star MrOneHundred, succinctly summed up the LifeLock bear case for our community:

I'm rather frustrated that 2.4 million people trust a company with a CEO who is clearly using high pressure tactics to make sales for a service that could never guarantee complete safety, not to mention services that are mostly free. ...

I presume that buyers are primarily skeptical, fearful and elderly individuals seeking security in their aging life and whom are ready to trust in a new service run by a attractive, trustworthy-looking man (CEO Todd Davis) who even has the audacity to post his own [social security number] saying that the service is good enough to prevent his identity from being used by others. Guess again, there are already 87 recorded attempts at identity theft with that number (one who successfully took out a payday loan with it) ... bad press for a company trying to support these services. ...

Here's a prediction: As customers become wiser about the validity of this service, they will begin to rebuke the service and the company will inevitably lose money due to high acquisition costs.

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