Shares of HUB Cyber Security (NASDAQ:HUBC) stock are up by about 165% today. This price action follows the events of the Israel-Hamas conflict over the weekend. The cybersecurity company, which is based in Israel, is likely reacting in response to possible cyberattacks of companies based in the country.
HUBC stock’s movement is interesting, as many had expected Israel-based companies to fall instead of rise. According to U.S. intelligence, there have not yet been any “major cyber campaigns” as part of the conflict. Still, The Jerusalem Post has reported that it has been the recipient of “sustained” and “coordinated” cyberattacks. At the time of this writing, its website is down and inaccessible.
What’s more, HUBC carried a short interest as a percentage of float of just 0.7% as of Sept 15. This suggests that today’s price incline is largely due to outright buying instead of short covering.
HUBC Stock Surges Following the Israel-Hamas Conflict
According to JPMorgan analyst Brian Essex, security companies with connections to Israel may be at risk of headline pressure as events from the conflict unfold.
“As events continue to evolve, we believe companies with operations in Israel are well prepared to manage geopolitical disruption in the region, but we would not be surprised to see headlines pressure more exposed stocks within our coverage universe,” wrote Essex in a note to clients. Essex provided a list of at-risk security companies but did not mention HUBC.
So, is HUBC’s price appreciation sustainable? Even after including today’s significant gains, the stock is still down by significantly this year. In June, HUB received a notification from the Nasdaq that its shares did not satisfy the minimum bid price requirement of $1. HUB will have until Dec. 6 to close at or above $1 for at least 10 consecutive business days. If HUB is unable to achieve this, it may be eligible for an additional 180-calendar-day compliance period.
On top of that, there also seems to be strife within the company’s management. After an internal investigation to investigate the misappropriation of company funds, HUB’s Special Committee of Independent Directors concluded that HUB’s former CEO likely misappropriated roughly $582,000 for his personal use. The Nasdaq noncompliance notices and evidence of misconduct in the company cast doubt that HUBC can sustain today’s gains.
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On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
