It really wasn’t very long ago that things were looking pretty good for Texas-based SolarWinds (NYSE:SWI) and its stakeholders. The company’s information technology management and security software, known as the Orion IT management system, was quite popular and SWI stock holders seemingly had nothing to worry about.
In a cruel and ironic twist of fate, however, the same company that offered to provide data management and security fell victim to a massive cyber-attack.
As you might expect, this event had a ripple effect throughout the data management market. If SolarWinds, a leader in this market, was vulnerable, then it felt like all businesses could soon be victimized.
At the very least, SolarWinds’ reputation was crushed. This was reflected in the sharply reduced SWI stock price. It’s unsettling, to be sure, but adventurous traders might actually find a buying opportunity here.
A Closer Look at SWI Stock
In actuality, the post-hack price drop isn’t the only flash crash in SWI stock. On Feb. 4, the stock was riding high at $21. A month and a half later, after the onset of the novel coronavirus, SWI had declined to $12.50.
Evidently, that price crash wasn’t caused by anything specific to SolarWinds. Since the company wasn’t in any trouble and there was still a high demand for information technology management software, SWI stock staged a full recovery.
On Dec. 11, the bulls managed to push SWI stock all the way up to a 52-week high of $24.34. Then the news of the cyber-attack was released. A rapid share-price drop to the $14 area ensued.
The good news for the bulls is that the worst of the price decline seems to be in the rear-view mirror. By Jan. 8, SWI stock was up to $15.35. Perhaps there’s room for further recovery, both for the company and the share price.
A Sophisticated Attack
There’s still an ongoing investigation into the exact nature of the aforementioned malware attack, but here’s what we do know.
According to SolarWinds, around 18,000 organizations may have been vulnerable due to the malware that hackers evidently inserted into Orion software updates from 2020.
Plus, it’s likely that the attackers weren’t amateurs. “This attack was a very sophisticated supply chain attack … with a goal of being able to attack subsequent users of the software,” SolarWinds explained.
Another one of SolarWinds’ statements suggests the possibility of unwanted foreign intervention: “We’ve been advised that the nature of this attack indicates that it may have been conducted by an outside nation state, but SolarWinds has not verified the identity of the attacker.”
And indeed, a joint statement issued by top U.S. national security agencies indicated that the intrusions were likely “Russian in origin.”
Thankfully, SolarWinds didn’t sit by idly after the cyber-attack. On Dec. 24, the company released updates in response to the malware, which was known as SUPERNOVA.
Reportedly, the company provided two “hotfix updates” containing security enhancements to the Orion Platform. Apparently, some of these enhancements were specifically designed to prevent further exploitation from SUPERNOVA attacks.
Moreover, in response to the SUPERNOVA attack, SolarWinds offered to provide consulting services at no cost to active maintenance Orion Platform product customers.
“The company wants to make sure that customers working to secure their environments have the help and assistance they need from knowledgeable resources,” SolarWinds assured its clientele.
And more recently, SolarWinds hired two security experts, Chris Krebs and Alex Stamos, to review the company’s security-related practices.
Krebs is particularly prominent in this field as he led the U.S. Cybersecurity and Infrastructure Security Agency (a component of the Department of Homeland Security).
The Bottom Line
Without a doubt, SolarWinds and its stakeholders suffered a major blow with the cyber-security attack.
However, the SWI stock price appears to be stabilizing. Plus, SolarWinds has taken prompt action to address the issue, so bold investors might choose to take a position now.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.