Shares of Booz Allen Hamilton (BAH) declined more than 4% Monday a day after employee Edward Snowden revealed himself as the leaker on the National Security Agency surveillance program that allegedly has collected vast amounts of phone and Internet data of U.S. citizens.
The consulting firm, which rakes in about 99% of its revenue from various levels of the federal government, has been quickly maneuvering to separate itself from Snowden, highlighting that the 29-year-old had been an employee for less than three months.
"News reports that this individual has claimed to have leaked classified information are shocking, and if accurate, this action represents a grave violation of the code of conduct and core values of our firm," Booz Allen said in a statement issued Sunday night. "We will work closely with our clients and authorities in their investigation of this matter."
Still, investors seem to be worried that Snowden's decision to expose the NSA program could have an impact on the firm going forward. Last year, Booz Allen was the 14th largest federal contractor, having won contracts worth more than $4 billion, according to U.S. government data.
Despite the day's drop, shares of Booz Allen are still up more than 20% in 2013.
Snowden's revelation and the move in Booz Allen's stock became a hot topic among traders on StockTwits.
On one end of the spectrum, the belief was that the drop was overblown.
But on the other end, traders predicted that Booz Allen could lose its key revenue stream if President Obama tries to distance the government from the firm.
But that seems unlikely. On Friday, Obama tried to reassure Americans that though surveillance programs involve "modest encroachments on privacy," they are worthwhile and "help us prevent terrorist attacks."
While the government probably won't cut all business ties with Booz Allen, it may be forced to drop some of its contracts with the firm due to federal budget cuts, and some traders said that will have a bigger impact on Booz Allen's business and stock performance.
There is clearly a lot of anger about the growing U.S. government snooping scandal. But investors aren't expressing any of it.
Despite a report that showed the NSA got a court order to receive phone records from telecom Verizon (VZ), shares rose nearly 3.5% Thursday. That made it the Dow's best performer. The stock was up again Friday.
Overnight, the story mushroomed into something much bigger, as reports of a government program MOREPaul R. La Monica - Jun 7, 2013 11:45 AM ET
The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, Abbott Laboratories and AbbVie, La Monica does not own positions in any individual stocks.
I called my mother yesterday from my cell phone at 1:07 p.m. ET. The conversation lasted for five minutes.
Since I'm a Verizon (VZ) subscriber, I guess there's a good chance that the government already knows MOREPaul R. La Monica - Jun 6, 2013 12:04 PM ET
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