NEW YORK (TheStreet) -- LifeLock (LOCK) was seriously wounded Monday. Shares of the identity theft protection company fell 16% intraday after management revealed in an SEC filing that the firm's payment service was not fully compliant with security standards.
StockTwits' users said the selloff was overdone. They argued that the market unfairly punished LifeLock for doing the right thing and disclosing the problem--before any data was compromised.
$LOCK All this because of an app being removed. Don't ppl know the app will eventually be back & better? -20% is too much, should bounce..? Henry Wolfe (@lonewolfe) May. 19 at 11:53 AM
In the filing, LifeLock underscored that it was not pulling the "Lemon Wallet" payment service because of a data breach. "We have no indication that the data included in the Wallet mobile application servers was compromised. The Wallet mobile application storage processes are separate and independent from LifeLock's core identity theft protection services business, including the enrollment and related credit card storage processes used in our standards LifeLock service and our LifeLock Ultimate service."
Lifelock management went on to say that the suspension of the Wallet service would not have an impact on core functionality. But the decision to yank the payment service certainly had an impact on long shareholders.
$LOCK is 50% off highs now. important reminder to manage risk and forget about what you think 'you know' or how much 'you like the story'
? TwentyOne (@TwentyOne) May. 19 at 02:22 PM
Investors argued Monday that the company's fundamentals were sufficiently strong to warrant a buy at these levels. The company has a $1.02 billion market cap and trades at 17x expected 2015 earnings. It has a price to sales ratio of 3X.
At the time of publication the author held no positions in any of the stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.