SolarWinds Corporation (NYSE:SWI) is coming off a brutal month of December where its share price cratered more than 34%. Investors sold off the stock after learning of a significant security breach that affected many of its customers -- even the U.S. government was impacted.
It's horrible news for a company that provides IT software and services, including infrastructure management. SolarWinds has released an update to protect against the malware, Supernova. The concern for investors is how this will impact SolarWinds and whether its customers will end up leaving and going to a competitor.
However, if it's one thing that history has taught investors is that a data breach doesn't mean doom and gloom for a company's stock. Over the past several years, many breaches have taken place, involving big names like Yahoo, LinkedIn, and Adobe.
Even a company like Equifax (NYSE:EFX), which is in the business of protecting sensitive information, was involved a huge breach back in 2017 that impacted nearly 150 million Americans. And yet, since then, shares of Equifax have more than doubled since it disclosed the breach in September 2017 and fell to less than $90 in the days following. Today, Equifax trades at more than $190.
There's no guarantee that SolarWinds will also double in value or prove to become a great buy at its price today – which is right around $15. However, investors shouldn't also write off the company either as it could very well recover from this.
There's a fair bit of risk involved with the stock but it could be an opportunity for contrarian investors who are willing to take a chance on SolarWinds.
