NEW YORK (Real Money) -- You need only to look at two charts to know why the new economy stocks are so much harder to own than old economy stocks. Check out the charts of FireEye (FEYE - Get Report) and Splunk (SPLK - Get Report), which, for all intents and purposes, might as well be the same exact picture.
FireEye, aided by a wildly acclaimed cybersecurity package, has seen its stock go from $40 at the beginning of the year to $96 in the first week of March and now back to $61.
Splunk, which does big data analytics -- don't they all? -- with a cybersecurity kicker, started the year at $69, rallied to $96 in the last week of February and is now at $71.
What happened to move both stocks higher? They reported phenomenal sales, with Splunk growing revenues at 53% and FireEye giving you an 81% sales increase. These results were nothing short of spectacular, and no one can doubt that these aren't two of the fastest-growing companies in the universe. In fact, I have never heard anything but great things from any analyst I have talked to about their products or their managements. These are the admitted and acknowledged gold standards of cybersecurity and big-data analytics. Given that cyber threats and big-data generation are probably the two biggest secular growing themes out there, these two are the most natural high-growth ways to play them.
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So what happened to their stocks? FireEye reported its blowout revenue quarter Feb. 11 when the stock was at $76 and it proceeded to trade right up to $96. It was an amazing run, but it's been downhill ever since, particularly of late. FireEye had 14 million shares priced at $82, a deal that was announced when the stock was much higher, and the stock hasn't been able to handle that supply ever since. It's like a gigantic 14 million share game of hot potato, odd given that this not some small-cap concern. It's $20 lower and it still hasn't found its footing.
For Splunk, when I checked around, I couldn't find anything until I saw a wave of insider selling and a large block of merchandise that hung over the stock, a mysterious block, 1.7 million shares, that traded at $70 the other day. This company's stock, even though it is an $8 billion company, simply couldn't withstand that onslaught.