NEW YORK (TheStreet) -- FireEye (FEYE) insiders held fast Wednesday. Shares of the security company rose more than 2% by midday, allaying fears that insiders would shed the stock after restrictions expired Tuesday night on tens of millions of shares.
$FEYE The assumption that since lockup has expired that massive selling must commence makes no sense.? Dave Openshaw (@dcopen) May. 21 at 12:24 PM
About 68% of FireEye's outstanding shares became available for sale today. But insiders, who have watched the stock decline 70% from March all-time highs, didn't try to lock in profits. Instead, they held, perhaps assuming that the worst was over and that their shares could only go up from here.
$FEYE today's volume: 13m... lock-up float: 82m? Justin K (@jckund) May. 21 at 01:33 PM
StockTwits' sentiment had called Wednesday's action. Sentiment on FireEye remained majority bullish Tuesday, with 55% of the crowd calling for the stock to gain Wednesday as short-sellers, faced with insider confidence in the company, covered rather than risk losses. The stock had 10.31% short interest, according to shortsqueeze.com.
$FEYE covered near 30.75 S; shorts see more downside or longs buying again?? Rayne Woo (@Rayneman) May. 21 at 01:28 PM
The significant short interest was understandable given the recent example of Twitter (TWTR). Shares of the microblogging company dropped 18% after restrictions expired on 480 million shares earlier this month. Twitter insiders decided to take profits after the stock had fallen more than 47% from all-time highs.
Some short sellers cautioned that FireEye could still fall this week. They said insiders might simply be unwilling to sell on a day when the broader indices were up, potentially lifting all stocks.
$FEYE Still short...Not even tempted to cover..Read this book before...:)I like the ending...Will cover below 29.Good luck.? Dominic (@SortaLegendary) May. 21 at 12:34 PM
$FEYE didn't hold PM highs, now back to open, showing good support at 31.00 new lows Thursday? MeS (@mtrade) May. 21 at 01:12 PM
But the action today didn't support their argument. Instead, the lack of insider selling affirmed the bulls' case that FireEye is deserving of its valuation. FireEye has a $4 billion market cap and management has guided to revenues of between $405 million and $415 million with margins between 70% and 73%.
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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.