Gigamon (GIMO) stock fell Tuesday, retreating from an all-time high of 55 set on Monday, after shares had risen more than 20% in the three previous trading days.
Gigamon stock slumped 3.1%, to 51.02, in the stock market today. Milpitas, Calif.-based Gigamon ranks No. 3 in the IBD 50. Gigamon has expanded into security from its first market, communications network hardware appliances that analyze and manage data traffic. Security products now account for about 60% of its total sales.
Four company co-founders own more than 14% of 12-year-old Gigamon. Ted Ho, one co-founder and CEO from 2008 to 2012, has sold some 850,000 shares, raising $5.67 million, since Aug. 4, according to Thomson Reuters.
While Ho has been reducing his stake since mid-2015, there’s been little insider trading by the other co-founders: Patrick Leong, Thomas Cheung and King Won.
Gigamon made its IPO in 2013, pricing shares at 19. Venture capital firm Highland Capital Partners invested more than $22 million in Gigamon in 2010, and Corey Mulloy, a general partner at Highland Capital, remains Gigamon chairman, but Highland is not among the shareholders listed as owning at least 5% of shares.
Gigamon has been viewed as a takeover candidate by some Wall Street firms, including Goldman Sachs and Credit Suisse. Speculation on possible buyers has included Cisco Systems (CSCO) and Juniper Networks (JNPR).
IBD’s TAKE: Gigamon is ranked No. 1 in IBD’s Internet-Network Solutions group, which also includes F5 Networks and Box. Private equity firms recently acquired two firms in the group, Infoblox and Rackspace Hosting. Learn more at IBD Stock Checkup.
Gigamon’s market cap has shot up to $1.8 billion in 2016, with shares soaring nearly 95%.
Gigamon’s Q2 earnings nearly doubled, to 30 cents a share. Revenue swelled 46% to $75.1 million. Analysts had expected 24 cents and $70.1 million.
In the second half of 2017, analysts expect upside from Gigamon’s products that support Amazon Web Services, the cloud computing business of Amazon.com (AMZN).
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