We are short shares of FIRE. Please click here to read full disclosures.
We believe that shares of Sourcefire, Inc. (FIRE) are highly overvalued.
Our full report is available here.
Note that Sourcefire reports earnings on April 30th, and if it beats analyst estimates, the stock could rise. We’re short regardless.
Following a 55% rally since the start of 2012, FIRE shares now imply a 5.4x 2013E revenue multiple and a 204x 2013E GAAP P/E. With valuation multiples as rich as these, it might sound strange to hear that Sourcefire added only 452 new customers in 2012, the exact same amount they added in 2011. Yet FIRE’s revenue growth expanded from 27% to 35% in 2012, masking the slowing momentum in new customer adds. We can attribute this mismatch to the…