• Jerremy Alexander Newsome

Carbon Black IPO

Hey Traders!

It’s Ashley back with a new IPO article about Carbon Black! When I first started researching them I was overwhelmed with the information and vocabulary, all of which were way over my head. So I spent the last couple of days diving deep, watching videos, and learning terms I have never heard before so I could report back to you and give you the easiest to understand explanation about what Carbon Black is! :) Hold your breathe, let’s jump!

Carbon Black, Inc. is a cybersecurity company based in Waltham, Massachusetts. They are known for their endpoint security software which is responsible for detecting malicious behavior and then preventing those malicious files from attacking an organization. Carbon Black is taking the lead in 3 distinct new spaces including; NGAV (Next-Generation Antivirus), EDR (Endpoint Detection and Response), and EPP (Endpoint Protection platform). They use a technology called the Predictive Security Cloud which we will get into later!

First let’s go over what the heck those other terms mean!


Do you remember downloading Antivirus systems on your computer? Maybe you still do! Carbon Black aims at making your old McAfee system pretty much obsolete! Traditional Antiviruses work by identifying a signature familiar to them (perhaps they have seen that specific attack before), stopping the attack, and that is where it ends. But as we know, the internet is constantly changing. If an attacker knows that you know their signature, it makes sense that they would change it to give them a greater chance of breaching your system. And that is why Next-Generation AntiVirus or NGAV is so revolutionary. NGAV uses Endpoint Detection Response (EDR) to algorithmically examine the behaviors of the attacker in order to prevent the attack, not just the signature. 

Think of it like an actual home invasion. A recognized signature of an intruder may be a broken window. So a traditional antivirus would say, we recognize this broken window as a sign of an attack, at which they would deploy their antivirus software. But as we know, a broken window may be too late to stop an attack. Next-Generation AV, on the other hand, examines the BEHAVIOR of the attacker, uses that behavior to prevent an attack earlier, and uses past attempts to predict future attacks. In the case of our home invasion example, NGAV may say an unknown car driving around the neighborhood at night with tinted windows surveying houses is suspicious and would deploy prevention measures at that point before the attack happens. It would then learn from that attempt to predict new methods of breach as well! So cool! 

That response is the EPP or Endpoint Protection Process. More technically "EPP is a solution deployed on endpoint devices to prevent file-based malware attacks, detect malicious activity, and provide the investigation and remediation capabilities needed to respond to dynamic security incidents and alerts."

Now we get to what makes Carbon Black unique, the Predictive Security Cloud. Carbon Black explains it like a security camera. Traditional AV systems typically only let you respond the actual attack but gives you no insight into what led up to it. That is because they send you filtered data because of how much data it would take to monitor the whole system. The storage would be unrealistic. The Predictive Security Cloud changes that. As it is cloud based, it is able to send you unfiltered data. Like a security camera you are able to "rewind" and analyze the attack from start to finish, which crazy enough was not actually used in any of this space until now.

So who is in this space you might ask? Who are they competing against? Carbon Black has a few main competitors and scoffs at the traditional AV systems like McAfee, Symantec, and others like it. It watches from its pedestal as those companies slowly nail their coffins shut. Close competitors actually in the sphere include Cylance, Crowdstrike, and even the well known FireEye.

Ironically, enough after much research, both Cylance and Crowdstrike are very similar to Carbon Black and provide almost identical solutions. Carbon Blacks' Predictive Security Cloud sets it apart from it's competitors though. All three companies continue to rake in major tech awards. However, Carbon Black's customer list is full of industry leaders like Nasdaq, NIST, WebMD, Samsung, and Adobe, to name a few. Let's not discount Crowdstrike though, as they were recently called in to handle the DNC breach and has been hired to investigate many recent high-profile data breaches as well.

Because Cylance and Crowdstrike are not traded on the stock market presently, let's look at FireEye another cyber security company.

FEYE has gotten absolutely wrecked since it's 2014 high. Here is a weekly chart. However, it seems to us that FEYE is entering a longer term accumulation phase (which is the first step on the path to recovery). Numbers are numbers however and FEYE is up $3.39 per share year to date. Which, had you bought it exactly at the start of 2018, you are up over 23%, which is nothing to sneeze at. Unless you bought in 2014, then you have a lot of red to sneeze over. Either way, let me get you a tissue. 

What we CAN see is a solid resistance at 18.46. Will FEYE break out? I am going with, yes, it's just a matter of time. The big challenge is now, will be the 200 SMA on the weekly. What most likely happens is a whole lot of nothing. #Chopcity. I could easily see FEYE doing something like this over the next few months. 

However, let's get back to CBLK. It's obviously brand new (thus this article) and doesn't appear to be a super popular stock or company, with only 250k shares traded on average per day. So, most likely it will not get tons of love in Real Life Trading Rooms. However, here is one perspective for a short term swing I could easily get talked into. 

Also, let's keep in mind that cyber security as a whole does have an ETF. And it's a MOVER! I think we could both agree how vital cyber security will be as we move deeper into a fully automated, push to start future with blue-tooth toasters and WiFi enabled deodorant sticks. 

Either way, I hope you found this article helpful, enriching and mentally delicious. Thank you SO much for helping us all Enrich Lives and until next time...


- Ashley Allen