CrowdStrike (NASDAQ:CRWD) and a number of cybersecurity shares were trading higher Thursday after a major, wide-ranging hack of the Twitter (NYSE:TWTR) platform.
What Happened: On Wednesday, strange tweets were sent from Tesla (NASDAQ:TSLA) CEO Elon Musk's official Twitter account and those of Apple Inc (NASDAQ:AAPL), Uber Technologies Inc (NYSE:UBER) and Microsoft Corporation (NASDAQ:MSFT) co-founder Bill Gates, among others.
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Needham's CrowdStrike analyst, Alex Henderson, says hack attacks usually result in increases in security stocks.
They range from traditional security names such as Palo Alto (NYSE:PANW), Fortinet (NASDAQ:FTNT) and CheckPoint (NASDAQ:CHKP) to high-growth cloud names such as CloudFlare (NYSE:NET), Zscaler (NASDAQ:ZS) CrowdStrike and Okta (NASDAQ:OKTA).
Related Link: Twitter Insider Was Allegedly Responsible For The Biggest Hacking Incident
Why It's Important: Henderson says this was a phish attack that compromised employees at Twitter.
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Although this particular hack is not tied to Cyberark Software Ltd (NASDAQ:CYBR) — the analyst says the company Cyberark is focused on "privilege access" — he says the example is similar to an in-house IT admin getting access to a computer to update it.
The identity was compromised, allowing the hackers to change the email account associated with the Twitter accounts, the analyst says.
“Some might argue privilege was an issue as the employees that were hit by the phish might be considered equivalent to IT admins.”
This particular breach would not relate to vulnerability management players such as Qualys, Rapid7 and Tenable, according to Needham.
Perimeter defense names such as Palo Alto, Fortinet and CheckPoint also would not stop this type of attack, Henderson says.
The Twitter hack correlates most tightly to Proofpoint Inc (NASDAQ:PFPT)
and Mimecast Ltd (NASDAQ:MIME), both of which protect against email-borne attacks or those social media, the analyst says, adding that the stocks tend to move as a group on these types of events.