Intrusion's Shield Will Lead The Way

Summary

• Intrusion's shares have been on a roller-coaster ride in 2020, but my research indicates that should be no concern to current investors.
• The company's new product, Shield, has the potential to be a game-changer for the company, helping Intrusion win business in the commercial space.
• The legacy products, TraceCop and Savant, will continue to produce strong revenue and earnings, all while boosting Shield's effectiveness and providing a "floor" for Intrusion's valuation.
• Investors should be aware that Intrusion will likely need to initiate a capital raise in order to bolster its sales team and future channel partners.

When I first wrote about security company Intrusion (NASDAQ:INTZ), in May 2020, I noted how the shares have been on a roller-coaster ride since late 2016. Despite the ups and downs, patient and opportunistic investors have been handsomely rewarded, seeing shares rise from a late 2016 low of $0.20, to an August 3, 2020, intra-day high of $10.49. The seesaw moves of the stock have not abated since my article was first published. In the 2+ months since I last wrote, the shares rose from approximately $3.50 to as high as $7.32 on June 23, only to fall quickly back to $5.48 on July 14, before taking off and reaching a high of $10.49 on August 3.

In this article, I hope to provide some insight into why INTZ investors have witnessed this volatility, as well as to explain why I believe INTZ shares currently offer a favorable risk-reward scenario, even from the current elevated levels. My excitement for INTZ revolves around the company's new product, Shield.

In addition to my previous article, I highly recommend Shareholders Unite's most recent piece, "Intrusion's New Product Could Be A Very Big Deal." Here, I will try not to repeat at length the background information provided within those two articles, but will instead focus on new information gleaned over the past two months of continuing to research INTZ.

INTZ's Volatility

INTZ's recent volatility may be concerning to some investors, but my research indicates a logical explanation for this roller-coaster ride. Clearly, the drop in INTZ shares towards the beginning of this year was related to two factors: (1) government funding delays with some of INTZ's largest clients; and (2) the broad-based market sell-off related to Covid-19. Shares eventually started to recover as the company indicated it was confident the government funding issue would

Analyst’s Disclosure:I am/we are long INTZ. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.