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Why SentinelOne Stock Rose 29.6% in August

By Billy Duberstein – Sep 7, 2021 at 8:00AM

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This newly public cybersecurity company was all the rage last month as cyberattacks once again were in the news.

Shares of SentinelOne (S -0.92%) surged 29.6% in August, according to data from S&P Global Market Intelligence. The new-age cybersecurity stock just went public on June 30, but has clearly already made a big impression.

Although there wasn't any specific news coming out of the company in August (second quarter earnings are set to come out on Wednesday, Sept. 8), high-profile cyberattacks were once again in the news, helping to drive sentiment higher for SentinelOne's modern capabilities. The company also got a big vote of confidence from a prominent hedge fund manager, who is also a large investor in this exciting company.

A female and male executive each point to a screen with a lock icon on it.

Image source: Getty Images.

So what

Like its main competitor, CrowdStrike (CRWD -0.55%), SentinalOne's Singularity platform uses big data and artificial intelligence (AI) models to anticipate and thwart cyberattacks in a modern, automated way. New age, software-defined solutions like SentinelOne and CrowdStrike are taking market share in the endpoint security market in a big way from legacy vendors.

One of SentinelOne's biggest investors is Dan Loeb's Third Point Management, a hedge fund that invested in SentinelOne when it was just a small start-up and now owns over 10% of the company. In his second-quarter letter to investors, Loeb wrote:

SentinelOne's next generation, AI-powered autonomous security product for the endpoint market continues to take share from legacy incumbents such as Symantec and McAfee. Its technology compares favorably to its most relevant next-gen endpoint protection competitor, Crowdstrike, in an environment where cybersecurity has become an essential enterprise need, highlighted by frequent, well-publicized attacks."

August also brought even more high-profile cyberattacks. U.S. telecom giant T-Mobile was hacked, with 54 million customer records compromised. August also saw a high-profile cybersecurity meeting between the Biden administration and the heads of most of the country's largest technology companies, as the administration seeks to strengthen the nation's cyberdefenses more broadly as a key strategic priority.

Greater attention to cyberthreats in August was enough to light a fire under SentinalOne's stock, which now sits at nearly double its IPO price.

Now what

When SentinelOne reports second-quarter earnings on Sept. 8, expectations will clearly be very high, as the stock has already reached a $17.7 billion market cap on just $161 million in average recurring revenue.

However, that revenue is also growing by over 100%, and should continue that strong trend as long as SentinelOne maintains its strong market position and cyberthreats continue in the global economy. I don't see that changing soon, so it's definitely a growth stock to watch.

Billy Duberstein owns shares of CrowdStrike Holdings, Inc. and T-Mobile US. His clients may own shares of the companies mentioned. The Motley Fool owns shares of and recommends CrowdStrike Holdings, Inc. The Motley Fool recommends T-Mobile US. The Motley Fool has a disclosure policy.

Stocks Mentioned

SentinelOne Stock Quote
$13.97 (-0.92%) $0.13
T-Mobile Us Stock Quote
T-Mobile Us
$148.79 (-0.40%) $0.60
CrowdStrike Stock Quote
$113.20 (-0.55%) $0.63
McAfee Corp. Stock Quote
McAfee Corp.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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