Zscaler (NASDAQ:ZS) Stock Price Down 6.8% - What's Next?

Key Points

• Zscaler shares fell 6.8% on Wednesday, with heavy trading volume, after closing at $144.15 and trading as low as $133.53.
• Investor focus remains on the company’s weaker free-cash-flow outlook and higher capex, which are pressuring sentiment around the premium-valued software stock. New shareholder litigation headlines may also be adding caution.
• Despite the drop, Wall Street still has a Moderate Buy consensus on Zscaler, and the company recently beat quarterly EPS and revenue estimates while forecasting FY 2026 EPS of $4.10 to $4.11.

Zscaler, Inc. (NASDAQ:ZS - Get Free Report)'s share price was down 6.8% during trading on Wednesday . The stock traded as low as $133.53 and last traded at $134.37. Approximately 7,627,205 shares changed hands during mid-day trading, an increase of 114% from the average daily volume of 3,569,956 shares. The stock had previously closed at $144.15.

Zscaler News Roundup

Here are the key news stories impacting Zscaler this week:

• Positive Sentiment: Wall Street still broadly rates Zscaler favorably, with recent notes highlighting a “Moderate Buy” consensus and several firms maintaining bullish views after the earnings release. Zscaler, Inc. NASDAQ: ZS Receives Average Rating of "Moderate Buy" from Analysts
• Positive Sentiment: Recent analysis from Zacks and other market coverage pointed to upside potential from analyst price targets and a breakout above the 50-day moving average, which can support a near-term technical rebound. Zscaler (ZS) Recently Broke Out Above the 50-Day Moving Average
• Neutral Sentiment: Zscaler presented at the Bank of America Global Technology Conference, but no major new catalyst emerged from the transcript to shift the stock’s direction. Zscaler, Inc. (ZS) Presents at Bank of America 2026 Global Technology Conference Transcript
• Neutral Sentiment: Options trading in Zscaler has been unusually active, which can reflect heightened speculation rather than a clear fundamental shift. Zscaler Target of Unusually High Options Trading NASDAQ: ZS
• Negative Sentiment: Investor concern remains centered on Zscaler’s lowered fiscal 2026 free-cash-flow margin outlook and higher capex, a combination that can pressure valuation for a premium software stock. Zscaler slides as investors continue to focus on lowered cash-flow outlook after recent results
• Negative Sentiment: New shareholder litigation headlines, including fraud investigations by law firms, may add to investor caution and overhang the shares. ZS Investors Have Opportunity to Join Zscaler, Inc. Fraud Investigation with the Schall Law Firm

Analyst Upgrades and Downgrades

Several equities research analysts have issued reports on the company. FBN Securities restated an "outperform" rating and set a $175.00 target price on shares of Zscaler in a research report on Wednesday, May 27th. The Goldman Sachs Group reiterated a "neutral" rating and issued a $179.00 price objective on shares of Zscaler in a research report on Wednesday, May 27th. BTIG Research reiterated a "neutral" rating on shares of Zscaler in a research report on Thursday, April 9th. Wedbush lowered their price objective on Zscaler from $300.00 to $220.00 and set an "outperform" rating on the stock in a research report on Wednesday, May 27th. Finally, Stifel Nicolaus reduced their target price on Zscaler from $180.00 to $175.00 and set a "buy" rating on the stock in a research note on Wednesday, May 27th. Thirty-three investment analysts have rated the stock with a Buy rating, six have given a Hold rating and one has issued a Sell rating to the stock. According to data from MarketBeat.com, the stock has an average rating of "Moderate Buy" and a consensus target price of $216.03.

Zscaler Stock Down 6.8%

The stock has a 50 day moving average price of $144.37 and a 200-day moving average price of $187.40. The stock has a market capitalization of $21.73 billion, a P/E ratio of -279.93 and a beta of 0.97. The company has a debt-to-equity ratio of 0.72, a current ratio of 1.86 and a quick ratio of 1.86.

Zscaler (NASDAQ:ZS - Get Free Report) last announced its quarterly earnings data on Tuesday, May 26th. The company reported $1.08 earnings per share (EPS) for the quarter, beating analysts' consensus estimates of $1.01 by $0.07. Zscaler had a negative return on equity of 0.37% and a negative net margin of 2.44%.The firm had revenue of $850.48 million for the quarter, compared to analysts' expectations of $835.14 million. During the same period last year, the firm earned $0.84 earnings per share. The company's revenue for the quarter was up 25.4% compared to the same quarter last year. Zscaler has set its Q4 2026 guidance at 1.080-1.090 EPS and its FY 2026 guidance at 4.100-4.110 EPS. As a group, research analysts expect that Zscaler, Inc. will post -0.03 EPS for the current fiscal year.

Insider Buying and Selling

In related news, insider Adam Geller sold 2,094 shares of the firm's stock in a transaction dated Wednesday, March 18th. The stock was sold at an average price of $153.53, for a total value of $321,491.82. Following the sale, the insider directly owned 46,949 shares of the company's stock, valued at $7,208,079.97. This trade represents a 4.27% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available through this link. Also, Director James A. Beer sold 177 shares of the firm's stock in a transaction dated Wednesday, March 18th. The stock was sold at an average price of $153.53, for a total value of $27,174.81. Following the completion of the sale, the director directly owned 4,384 shares in the company, valued at $673,075.52. The trade was a 3.88% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. Insiders sold 12,130 shares of company stock valued at $1,892,487 over the last ninety days. Corporate insiders own 17.20% of the company's stock.

Institutional Trading of Zscaler

Several institutional investors and hedge funds have recently bought and sold shares of ZS. Vanguard Group Inc. lifted its holdings in shares of Zscaler by 0.5% during the fourth quarter. Vanguard Group Inc. now owns 11,423,424 shares of the company's stock valued at $2,569,357,000 after purchasing an additional 55,521 shares during the last quarter. Groupama Asset Managment increased its position in shares of Zscaler by 76,352.6% during the third quarter. Groupama Asset Managment now owns 4,750,000 shares of the company's stock valued at $1,423,385,000 after acquiring an additional 4,743,787 shares in the last quarter. First Trust Advisors LP increased its position in shares of Zscaler by 36.2% during the first quarter. First Trust Advisors LP now owns 3,518,678 shares of the company's stock valued at $493,635,000 after acquiring an additional 935,781 shares in the last quarter. Price T Rowe Associates Inc. MD increased its position in shares of Zscaler by 43.3% during the fourth quarter. Price T Rowe Associates Inc. MD now owns 2,572,358 shares of the company's stock valued at $578,576,000 after acquiring an additional 777,414 shares in the last quarter. Finally, State Street Corp increased its position in shares of Zscaler by 3.4% during the fourth quarter. State Street Corp now owns 2,337,604 shares of the company's stock valued at $525,774,000 after acquiring an additional 77,800 shares in the last quarter. 46.45% of the stock is currently owned by hedge funds and other institutional investors.

About Zscaler

Zscaler is a cloud security company that delivers a cloud-native platform to protect users, applications and data as organizations move away from traditional, network-centric security architectures. The company focuses on a zero trust approach that assumes no implicit trust for users or devices, providing secure access to the internet, SaaS applications and private applications regardless of where users are located. Zscaler positions its services as an alternative to legacy appliances and site-centric VPNs, aiming to simplify security while enabling modern, distributed workforces.

Key offerings are built around the Zscaler Zero Trust Exchange, a multi-tenant cloud platform that enforces security and access policies in-line.

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