Shares of Boston-based Rapid7 soared on Wednesday after reports that the cybersecurity firm could be acquired.
The news comes after Rapid7 disappointed investors with slowing revenue growth last year. Despite Wednesday’s surge — his 23% gain in midday trading — Rapid7’s stock is down 50% over the past year.
Reuters reported Wednesday that Rapid7 has hired investment bank Goldman Sachs after receiving potential acquisition interest. The company declined to comment.
According to Needham & Co. analyst Alex Henderson, the cybersecurity industry may be ripe for consolidation.
“Like other point product companies, it’s seen by many on the street as a potential takeaway name,” Henderson wrote in a report Wednesday. We think it’s expensive, but strategic buyers think otherwise.”
Henderson added that despite Wednesday’s surge in stocks, “there’s likely to be an upside if a deal goes through, but the risk remains that a price may not be agreed.”
Falling stock prices of tech companies of all kinds can lead to increased M&A activity. Amazon he offered his $1.7 billion to iRobot in August, and Akamai he was the subject of acquisition rumors in October. However, Amazon’s deal is pending regulatory approval and has not yet made an offer to Akamai.
Rapid7 was founded in 2000 and went public in 2015. Under CEO Corey Thomas, Rapid7 is itself an active acquirer, with him paying $335 million to threat intelligence firm IntSights in 2021. ” Zatko as a resident executive.
Aaron Pressman can be reached at [email protected] follow him on twitter @Ampress Man.