The Slump Deepens at Cybersecurity Startup Darktrace

(Bloomberg) --

Darktrace Plc, the U.K. cybersecurity firm whose value has plunged in recent days on a sell recommendation and the end of a lockup period, extended its slide Wednesday after an investor sold a block of shares at a discount.

The stock fell as much as 11% in early trading after news that a fund managed by Vitruvian Partners LLP had offered 11 million shares at a price about 8% below the last closing price. Darktrace has now lost more than a third of its market value, or about 2.5 billion pounds ($3.4 billion), since Peel Hunt analysts recommended selling the shares on Oct. 25.

In a note last week, Peel Hunt warned that some experts had viewed Darktrace’s artificial intelligence-based detection system as a “gimmick.” The company said in response that its product does provide protection and that customer satisfaction is “industry-leading.”

Peel Hunt’s note came around the time of a lockup expiry that allowed early investors to reduce previous holdings, further pressuring the shares.

The broker reiterated its negative stance on Tuesday, though other analysts are more positive. In a note published Wednesday, Jefferies’ Charles Brennan said that “based on industry data, we think there is clear evidence that Darktrace is the fastest-growing company in this sector.”

Darktrace was down 5.2% to 599.5p as of 9:50 a.m. in London, still trading well above its April initial public offering price of 250-pence-a-share.

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