Zscaler Faces Stock Decline Amid Weak Earnings Outlook
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Dec 03 2024
0mins
Source: investopedia.com
Zscaler Inc's shares fell 5.03% as the stock hit a 5-day low, reflecting ongoing investor concerns.
The company's recent guidance for 2027 indicates an annualized recurring revenue (ARR) growth of only 16% to 17%, down from 21% last quarter, leading to a significant drop in stock price. This disappointing outlook has raised questions about Zscaler's ability to sustain growth without further acquisitions, especially following the acquisition of Symmetry Systems and the shift to a usage-based pricing model.
Despite these challenges, Zscaler's current stock price at 6.5 times revenue expectations may present an attractive investment opportunity for patient investors, particularly as the company anticipates a potential revenue growth reacceleration post-2027.
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Analyst Views on ZS
Wall Street analysts forecast ZS stock price to rise
30 Analyst Rating
24 Buy
6 Hold
0 Sell
Strong Buy
Current: 124.060
Low
260.00
Averages
325.62
High
390.00
Current: 124.060
Low
260.00
Averages
325.62
High
390.00
About ZS
Zscaler, Inc. is a cloud security company. The Company has developed a platform incorporating core security functionalities needed to enable fast and secure access to cloud resources based on identity, context and an organization's policies. Its Zscaler Zero Trust Exchange is a cloud-native platform that securely connects users, devices, applications and workloads, including artificial intelligence (AI) agents, without relying on hub-and-spoke network architecture and firewall-centric security. It delivers its solutions using a software-as-a-service (SaaS) business model and sells subscriptions to customers to access its cloud platform, together with related support services. Its services include Zscaler Internet Access (ZIA), Zscaler Private Access (ZPA), and Zscaler Digital Experience (ZDX). ZIA provides secure access to externally managed applications, including SaaS applications and internet destinations, regardless of device, location or network.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Zscaler Under Investigation for Securities Fraud
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- Significant Stock Decline: Following the earnings report, Zscaler's stock plummeted by $58.19, or 31.52%, closing at $126.41 per share on May 27, 2026, reflecting investor concerns about future performance.
- Legal Investigation Launched: Pomerantz LLP is investigating Zscaler and its executives for potential securities fraud or other unlawful business practices, which could further damage the company's reputation and shareholder confidence.
- Investor Action Call: Pomerantz LLP is urging Zscaler investors to contact their attorneys to join the class action, highlighting investor concerns over corporate governance and transparency, which may lead to broader legal and financial repercussions.
See More
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- Investor Rights Protection: The firm encourages investors who have incurred losses in Zscaler stock or options to contact partner Josh Wilson directly, demonstrating a commitment to protecting investor rights and potentially prompting more affected investors to seek legal recourse.
- Industry Influence: Faruq & Faruqi is a nationally recognized securities law firm that has recovered hundreds of millions of dollars for investors since its founding in 1995, showcasing its expertise and influence in the securities litigation field.
- Legal Consultation Access: Investors can reach out to Josh Wilson by calling 877-247-4292 or 212-983-9330 (Ext. 1310), providing a convenient channel for legal consultation that may encourage more investors to participate in the claims process.
See More
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- Chip Stocks Decline: With Marvell Technology and Intel falling over 9% and 8% respectively, the weakness in chipmakers weighed on the broader market, suggesting that the pressure on tech stocks may impact future investment sentiment.
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- Oil Prices Plummet: WTI crude oil prices dropped more than 5% to a 3.5-month low due to the U.S.-Iran agreement to reopen the Strait of Hormuz, enhancing expectations for a revival in oil supplies, which may affect the performance of energy stocks.
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- Weak Housing Data: US May housing starts fell by 15.4% month-over-month to a six-year low of 1.177 million, significantly below the expected 1.430 million, while building permits also declined slightly, reflecting weakness in the real estate market that could negatively impact overall economic growth.
- Oil Price Impact on Sentiment: WTI crude oil prices dropped over 3% to a 3.25-month low due to the US-Iran agreement to reopen the Strait of Hormuz, which has eased inflation expectations; while this provides short-term support for stocks, the long-term effects remain to be seen.
- Fed Meeting Focus: The market is turning its attention to the two-day FOMC meeting, where rates are expected to remain unchanged, but the press conference led by new Chair Kevin Warsh will be crucial, as investors will look for insights on future inflation outlook and policy direction.
See More
Mixed Performance in US Stock Indices Amid Energy Sector Pressure
- Mixed Market Performance: The S&P 500 Index rose by 0.11%, the Dow Jones Industrial Average increased by 0.57%, while the Nasdaq 100 Index fell by 0.18%, indicating a complex market sentiment particularly influenced by the pressure on energy stocks due to declining oil prices.
- Oil Price Impact: WTI crude oil prices dropped over 3% to a 3.25-month low, easing inflation expectations and providing support for stocks and bonds, reflecting a cautious market outlook on future economic growth.
- Weak Housing Data: US May housing starts fell by 15.4% month-over-month to a six-year low of 1.177 million, below the expected 1.430 million, indicating potential challenges for economic recovery stemming from a sluggish real estate market.
- FOMC Meeting Focus: Market attention shifts to the two-day FOMC meeting, where rates are expected to remain unchanged, but the press conference led by new Chair Kevin Warsh will be pivotal in shaping future monetary policy directions.
See More
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- Poor Stock Performance: Zscaler's shares fell 3.7% today, marking a year-to-date decline of 44.2%, indicating a weakening competitive position that could impact investor confidence and future financing capabilities.
- Market Dynamics Analysis: As the worst-performing component in the Nasdaq 100, Zscaler's struggles reflect challenges within the tech sector, potentially prompting investors to reassess its long-term growth prospects.
- Other Company Movements: In contrast to Zscaler, Applovin's stock decreased by 3.0% today, while Seagate Technology Holdings rose by 6.6%, highlighting varying market reactions that could influence portfolio allocations.
- Investor Focus: Zscaler's ongoing decline may lead analysts and investors to scrutinize its financial health and future strategies to evaluate its viability in a highly competitive market.
See More
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- Strong Financial Performance: Zscaler's Q3 2026 fiscal results exceeded expectations in revenue and earnings; however, the company guided for current-quarter revenue between $875 million and $878 million, falling short of the $879 million consensus, indicating potential growth slowdown.
- Significant Stock Decline: Following the earnings report, Zscaler's stock plummeted by $58.19, or 31.52%, closing at $126.41 per share on May 27, 2026, reflecting investor concerns about future performance.
- Legal Investigation Launched: Pomerantz LLP is investigating Zscaler and its executives for potential securities fraud or other unlawful business practices, which could further damage the company's reputation and shareholder confidence.
- Investor Action Call: Pomerantz LLP is urging Zscaler investors to contact their attorneys to join the class action, highlighting investor concerns over corporate governance and transparency, which may lead to broader legal and financial repercussions.
See More
Faruqi & Faruqi Investigates Zscaler Investor Losses
- Legal Investigation Launched: Faruq & Faruqi LLP is investigating potential claims against Zscaler, Inc., aiming to provide legal support for investors who have suffered significant losses, indicating that the company faces legal risks that could impact its stock performance.
- Investor Rights Protection: The firm encourages investors who have incurred losses in Zscaler stock or options to contact partner Josh Wilson directly, demonstrating a commitment to protecting investor rights and potentially prompting more affected investors to seek legal recourse.
- Industry Influence: Faruq & Faruqi is a nationally recognized securities law firm that has recovered hundreds of millions of dollars for investors since its founding in 1995, showcasing its expertise and influence in the securities litigation field.
- Legal Consultation Access: Investors can reach out to Josh Wilson by calling 877-247-4292 or 212-983-9330 (Ext. 1310), providing a convenient channel for legal consultation that may encourage more investors to participate in the claims process.
See More
U.S. Stocks Close Mixed: Dow Hits All-Time High
- Dow Hits All-Time High: The Dow Jones Industrial Average rose by 0.64%, reaching a new all-time high, reflecting investor confidence in economic recovery, despite mixed overall market performance indicating divergent views among investors on various sectors.
- Chip Stocks Decline: With Marvell Technology and Intel falling over 9% and 8% respectively, the weakness in chipmakers weighed on the broader market, suggesting that the pressure on tech stocks may impact future investment sentiment.
- Weak Housing Data: U.S. May housing starts fell 15.4% month-over-month to a six-year low of 1.177 million, below expectations of 1.430 million, indicating that the weakness in the housing market could pose challenges to economic growth.
- Oil Prices Plummet: WTI crude oil prices dropped more than 5% to a 3.5-month low due to the U.S.-Iran agreement to reopen the Strait of Hormuz, enhancing expectations for a revival in oil supplies, which may affect the performance of energy stocks.
See More
Mixed US Stock Market with Energy Stocks Under Pressure
- Market Divergence: The S&P 500 Index fell by 0.18% and the Nasdaq 100 Index dropped by 0.83%, while the Dow Jones Industrial Average rose by 0.69% to a new all-time high, indicating a divergence in market performance, particularly as energy stocks are pressured by plunging crude oil prices.
- Weak Housing Data: US May housing starts fell by 15.4% month-over-month to a six-year low of 1.177 million, significantly below the expected 1.430 million, while building permits also declined slightly, reflecting weakness in the real estate market that could negatively impact overall economic growth.
- Oil Price Impact on Sentiment: WTI crude oil prices dropped over 3% to a 3.25-month low due to the US-Iran agreement to reopen the Strait of Hormuz, which has eased inflation expectations; while this provides short-term support for stocks, the long-term effects remain to be seen.
- Fed Meeting Focus: The market is turning its attention to the two-day FOMC meeting, where rates are expected to remain unchanged, but the press conference led by new Chair Kevin Warsh will be crucial, as investors will look for insights on future inflation outlook and policy direction.
See More
Mixed Performance in US Stock Indices Amid Energy Sector Pressure
- Mixed Market Performance: The S&P 500 Index rose by 0.11%, the Dow Jones Industrial Average increased by 0.57%, while the Nasdaq 100 Index fell by 0.18%, indicating a complex market sentiment particularly influenced by the pressure on energy stocks due to declining oil prices.
- Oil Price Impact: WTI crude oil prices dropped over 3% to a 3.25-month low, easing inflation expectations and providing support for stocks and bonds, reflecting a cautious market outlook on future economic growth.
- Weak Housing Data: US May housing starts fell by 15.4% month-over-month to a six-year low of 1.177 million, below the expected 1.430 million, indicating potential challenges for economic recovery stemming from a sluggish real estate market.
- FOMC Meeting Focus: Market attention shifts to the two-day FOMC meeting, where rates are expected to remain unchanged, but the press conference led by new Chair Kevin Warsh will be pivotal in shaping future monetary policy directions.
See More
Zscaler Shares Drop 3.7%, Down 44.2% YTD
- Poor Stock Performance: Zscaler's shares fell 3.7% today, marking a year-to-date decline of 44.2%, indicating a weakening competitive position that could impact investor confidence and future financing capabilities.
- Market Dynamics Analysis: As the worst-performing component in the Nasdaq 100, Zscaler's struggles reflect challenges within the tech sector, potentially prompting investors to reassess its long-term growth prospects.
- Other Company Movements: In contrast to Zscaler, Applovin's stock decreased by 3.0% today, while Seagate Technology Holdings rose by 6.6%, highlighting varying market reactions that could influence portfolio allocations.
- Investor Focus: Zscaler's ongoing decline may lead analysts and investors to scrutinize its financial health and future strategies to evaluate its viability in a highly competitive market.
See More
