Darktrace (LON: DARK) shares are up 12% in London this morning on no obvious news. There is an announcement that the company has bought in some more of its own shares. But that's been long announced and is just the working out of something we all knew was going to happen. This is also an ongoing process, not some one off effort. The other thing about this is that at least some such buying in is to offset the dilutive effect of options issuance as they announced yesterday. This is not the sort of thing that we'd expect to add 10% and more to the market capitalisation of a company of Darktrace's size.
We must therefore assume that the change is a result of market sentiment changing. There is that announcement that DARK's technology can now look out for AI inspired evils on a corporate network. Which is nice, but again that's just one of those things we'd expect really. That news is also a bit old to be driving the price today.
Darktrace share price from London Stock Exchange
Our assumptions come on one of two flavours - perhaps some mix of both of them. The first is that we know from NCC and Shearwater (and Darktrace admitted to this too) cybersecurity has been having a closing problem. Managements all agree that it's very important, that they really should do something and so on. But it turns out to be remarkably had to get them to actually sign on the dotted line and start paying over cash. As we say, Darktrace as admitted to this in a milder form. We've recently heard from Shearwater that for them at least this problem appears to be easing. So, perhaps we should say the same about Darktrace?
The other issue is that problem over Autonomy and Mike Lynch. The slight worry on the market being that Autonomy was - to be kind about it - accused of being aggressive in revenue recognition. Mike Lynch has now been extradited to the US to stand trial on charges stemming from the HP takeover. The worry has long been, well, given that Lynch was a founder at Darktrace, are they also - umm - aggressive on revenue recognition. All the specific examples used the company says were sorted out before flotation. And maybe they all were.
But reputations don't necessarily depend upon facts. So, perhaps that reputation - or worry - is lifting. Now that Lynch is extradited and there's little prospect of a trial for months and months at least, there might well not be any news to worry people on the point.
