The FTSE 100 index is up 2.4% over the past month, and some of its constituent shares have soared in value. However, the Footsie’s worst performer over 30 days is the stock of Darktrace (LSE: DARK). As I write, the Darktrace share price stands at 592.84p, down 2.9% today. Furthermore, DARK shares have crashed by 28.7% over the past month.
The Darktrace share price crashes
When Anglo-American cyber-defence firm Darktrace floated on the London Stock Exchange on 30 April, it was valued at £1.7bn. But the Darktrace share price soared like a rocket from the float price of 250p. At its all-time high on 24 September, DARK hit an intra-day peak of 1,003p. In other words, this tech stock had quadrupled in value in less than five months.Â
Alas, Darktrace shareholders soon found out that financial gravity means what goes up can eventually come down. Since peaking in late September, the Darktrace share price has plunged, losing over 410p from its high. That’s a crash of more than two-fifths (-40.8%) in under two months.Â
In hindsight, it may be that the Darktrace share price at IPO (initial public offering) was perhaps too low at 250p. Indeed, investors who bought at this price would have more than doubled their money, gaining 137.1% in under seven months. Perhaps equally likely is that Darktrace — with 2020 revenues of a mere $200m — was overvalued at £10+ a share. Looking ahead, this growth company might need several quarters of strong revenue growth to underpin its current market value of £4.1bn…