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Why LifeLock Stock Popped Today

By Steve Symington - Jul 22, 2015 at 11:43AM

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LifeLock rebounded after a massive decline yesterday as investors express optimism the situation is temporary.

What's happening: Shares of LifeLock ( LOCK ) rebounded as much as 10.9% early Wednesday, and had settled up around 5% as of 10:30 a.m. as investors digested yesterday's massive 49% plunge.

Why it's happening: That drop came after the Federal Trade Commission announced it is taking action against the company for allegedly violating a 2010 order regarding past deceptive advertising practices, and failing to adequately protect sensitive customer information.

LifeLock, for its part, insisted it disagrees with the FTC's latest assertions, saying "After more than 18 months of cooperation and dialog with the FTC, it became clear to us that we could not come to a satisfactory resolution of their issues outside of a court of law."

LifeLock also noted the FTC's action concerns its past business practices, so shouldn't change its current products or marketing efforts. But even if LifeLock wins this battle in the courts, it's hard to imagine a scenario in which the brand comes out unscathed in the eyes of consumers. In the end, given the gravity of yesterday's drop, today's much more modest pop is hardly surprising as opportunistic investors scoop up shares of LifeLock with the hope that this, too, shall pass.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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