Zscaler crashes 31% on awful guidance and sales shakeup — short the fallout
Cybersecurity company Zscaler lost nearly a third of its value in a single day after issuing cautious financial guidance and shaking up its sales leadership. The stock has now lost half its value over the past year.
Idea
A 31% single-day crash is not normal profit-taking — it signals that Wall Street is fundamentally rethinking the company's growth story. Zscaler also announced a sales leadership shakeup, which usually means internal problems. The stock has been cut in half over the past year, so there is no strong base of support underneath. Stocks that gap down this violently often continue drifting lower over the next several days as ratings downgrades and margin calls pile up. The risk is a sharp short-covering bounce, so keeping the position size small and the timeframe tight is key.