Cyberthreats exploded last year amid the COVID-19 pandemic, driving shares of cybersecurity firms higher throughout 2020. Those threats culminated in one of the largest cyberattacks in history, after major IT provider SolarWinds was breached and used as a conduit for a sophisticated malware campaign that went on to infect 9 federal agencies in the US, as well as 100 private firms. That attack made headlines and remains fresh in the minds of many consumers and business leaders.
Additionally, with so many employees working from home, becoming increasingly reliant on remote sign-ins and cloud-based infrastructure, data has become that much more vulnerable to hackers. Cybersecurity revenues are expected to grow even further this year, as survey data shows the majority of executives plan to increase their cybersecurity budgets.
Related ETF & Stocks: First Trust NASDAQ Cybersecurity ETF (CIBR), CrowdStrike Holdings, Inc. (CRWD), Zscaler, Inc. (ZS), Palo Alto Networks, Inc. (PANW)
The global cybersecurity market is expected to reach just over $60 billion in 2021, a 10% YoY increase in “best case scenario” growth, according to a Canalys forecast report. Even in a “worst case scenario” market forecast, Canalys expects the cybersecurity market to grow 6.6% year over year, reaching nearly $58 billion.
That comes after the cost of cybercrime jumped to over $1 trillion in 2020, according to McAfee. Per CybersecurityDive, that number combines monetary losses (over $900 billion) with the cost of providing cybersecurity (about $145 billion).
Share prices in the cybersecurity industry boomed in the final quarter of 2020, when a widespread malware campaign compromised US government servers, as well as the data of many private businesses. The hack begun at software firm SolarWinds, a company that enables private and public sector organizations to track what’s happening on its computer networks. State-backed hackers (likely of Russian origin) inserted malicious code into an update of Orion, one of the company’s platforms. Cnet notes that around 18,000 SolarWinds customers installed the tainted update onto their systems, the company said, and hackers chose a select number of them to infiltrate further.
The malware was first recognized when cybersecurity firm FireEye, Inc. realized it had been breached, which immediately sent shares of the company tumbling. However, as MRP noted in the aftermath, the scale of attack on FireEye’s toolkit was limited, well-contained, and compromised none of the firm’s customer data or zero-day exploits (vulnerabilities that do not have a fix) were accessed. FireEye has recently been trading higher than it had been prior to the hack.
Many others were not so lucky.
It initially became clear that the Departments of Commerce, the Treasury, and State were breached at some level, but that was only the beginning. In all, nine federal agencies and 100 private companies, including Microsoft, have been confirmed compromised thus far.
However, in a Tuesday Senate hearing on the SolarWinds breach, the Wall Street Journal noted that testifying tech executives suggested further key victims have yet to be publicly identified. According to Brad Smith, the president of Microsoft, “There may be other brand-name players that may have been penetrated that have not been as forthcoming…leaving policy makers and potentially customers in the dark.”
The US House of Representatives’ Oversight and Homeland Security Committees will follow up on the Senate testimony, holding a joint hearing on Friday.
Compared with 2019, CrowdStrike’s experts tracking cyberattacks across the globe saw a 214% increase in cyberattacks and attempts to break into computer networks during the past year, Adam Meyers, senior vice president of intelligence, said in an interview.
Businesses are taking notice of the heightened need for cybersecurity resources. According to PwC’s 2021 Global Digital Trust Insights: Cybersecurity Comes of Age, 55% of 3,249 surveyed executives plan to increase their cybersecurity budgets in 2021 over 2020, with more automated, adaptive cybersecurity being the goal for this year…