Zscaler (NASDAQ:ZS) Stock Price Down 7.4% - Should You Sell?

Key Points

• Zscaler shares fell 7.4% on Tuesday, trading as low as $143.75 after closing at $155.71 the prior day, with volume running well above average.
• Despite the drop, analysts remain broadly constructive: several firms maintained Buy/Overweight ratings, and the stock still carries a Moderate Buy consensus with an average price target of $216.03.
• The company’s latest results showed strong revenue growth and beats on earnings and sales, but the stock is facing pressure from post-earnings selling, shareholder investigations, and concerns that expectations remain elevated.

Zscaler, Inc. (NASDAQ:ZS - Get Free Report) shares fell 7.4% during trading on Tuesday . The company traded as low as $143.75 and last traded at $144.1190. 10,304,777 shares changed hands during trading, an increase of 71% from the average session volume of 6,040,175 shares. The stock had previously closed at $155.71.

More Zscaler News

Here are the key news stories impacting Zscaler this week:

• Positive Sentiment: Guggenheim upgraded Zscaler to Buy and set a higher target, with multiple reports highlighting roughly 25%+ implied upside from Wall Street price targets. Why Is Zscaler (ZS) Stock Soaring Today
• Positive Sentiment: Technical traders are encouraged by Zscaler breaking above its 50-day moving average, which can signal improving short-term momentum. Zscaler (ZS) Recently Broke Out Above the 50-Day Moving Average
• Positive Sentiment: Analysts continue to point to strong earnings estimate revisions and improving sentiment around Zscaler’s AI and cybersecurity growth story. Wall Street Analysts Think Zscaler (ZS) Could Surge 25.28%
• Positive Sentiment: In the latest earnings call coverage, management highlighted strong adoption of its Zero Trust SASE platform, public-sector expansion, and AI-related demand tailwinds. 5 Insightful Analyst Questions From Zscaler’s Q1 Earnings Call
• Neutral Sentiment: There is also elevated investor attention and unusual options activity, suggesting traders are positioning for continued volatility rather than a clear long-term trend.
• Negative Sentiment: Law firms have launched shareholder investigations into possible securities-law issues, which could create overhang and keep some investors cautious.
• Negative Sentiment: The stock remains under pressure from a recent post-earnings selloff and concerns that growth expectations may still be demanding despite the rebound. Zscaler: Great Opportunity On The Post-Earnings Selloff

Analyst Ratings Changes

Several research analysts recently issued reports on the stock. Robert W. Baird dropped their price target on shares of Zscaler from $265.00 to $230.00 and set an "outperform" rating for the company in a research report on Wednesday, May 27th. Rosenblatt Securities dropped their price target on shares of Zscaler from $223.00 to $200.00 and set a "buy" rating for the company in a research report on Wednesday, May 27th. Needham & Company LLC reissued a "buy" rating and issued a $180.00 price target on shares of Zscaler in a research report on Wednesday, May 27th. Cantor Fitzgerald dropped their price target on shares of Zscaler from $300.00 to $225.00 and set an "overweight" rating for the company in a research report on Wednesday, May 27th. Finally, The Goldman Sachs Group reissued a "neutral" rating and issued a $179.00 price target on shares of Zscaler in a research report on Wednesday, May 27th. Thirty-three equities research analysts have rated the stock with a Buy rating, six have assigned a Hold rating and one has assigned a Sell rating to the company's stock. According to MarketBeat, the stock presently has an average rating of "Moderate Buy" and a consensus price target of $216.03.

Zscaler Trading Down 7.4%

The company has a market cap of $23.31 billion, a price-to-earnings ratio of -300.31 and a beta of 0.96. The company's fifty day moving average price is $144.37 and its two-hundred day moving average price is $187.40. The company has a quick ratio of 1.86, a current ratio of 1.86 and a debt-to-equity ratio of 0.72.

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

Insider Activity at Zscaler

In other news, insider Robert Schlossman sold 2,263 shares of the firm's stock in a transaction that occurred on Tuesday, March 17th. The shares were sold at an average price of $156.59, for a total transaction of $354,363.17. Following the completion of the sale, the insider owned 72,390 shares of the company's stock, valued at approximately $11,335,550.10. This trade represents a 3.03% decrease in their ownership of the stock. The transaction was disclosed in a filing with the SEC, which is accessible through this link. Also, EVP Raj Judge sold 2,488 shares of the firm's stock in a transaction that occurred on Tuesday, March 17th. The stock was sold at an average price of $156.59, for a total transaction of $389,595.92. Following the sale, the executive vice president directly owned 67,906 shares of the company's stock, valued at approximately $10,633,400.54. The trade was a 3.53% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. In the last quarter, insiders have sold 12,130 shares of company stock valued at $1,892,487. Insiders own 17.20% of the company's stock.

Institutional Trading of Zscaler

Several hedge funds have recently modified their holdings of the stock. Bessemer Group Inc. grew its stake in shares of Zscaler by 3.2% during the third quarter. Bessemer Group Inc. now owns 1,021 shares of the company's stock valued at $306,000 after purchasing an additional 32 shares during the last quarter. Wedbush Securities Inc. grew its stake in shares of Zscaler by 0.7% during the third quarter. Wedbush Securities Inc. now owns 5,129 shares of the company's stock valued at $1,537,000 after purchasing an additional 34 shares during the last quarter. Goldstream Capital Management Ltd grew its stake in shares of Zscaler by 0.3% during the third quarter. Goldstream Capital Management Ltd now owns 12,450 shares of the company's stock valued at $3,731,000 after purchasing an additional 34 shares during the last quarter. Kentucky Retirement Systems Insurance Trust Fund grew its stake in shares of Zscaler by 1.4% during the third quarter. Kentucky Retirement Systems Insurance Trust Fund now owns 2,569 shares of the company's stock valued at $770,000 after purchasing an additional 36 shares during the last quarter. Finally, Advisor OS LLC grew its stake in shares of Zscaler by 4.6% during the third quarter. Advisor OS LLC now owns 879 shares of the company's stock valued at $263,000 after purchasing an additional 39 shares during the last quarter. 46.45% of the stock is owned by 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.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.