Zscaler just had its worst day ever, down 31% — short the bounce as the sell-off continues
Cybersecurity company Zscaler lost nearly a third of its value today — its worst day ever — after issuing cautious forward guidance and shaking up its sales leadership. The stock has now lost more than half its value over the past year.
Idea
A 31% single-day crash is extreme, and the fundamental reasons behind it — cautious guidance and a sales leadership shake-up — suggest the business is deteriorating, not just having a bad quarter. Zscaler has already been cut in half over the past year, so the longer-term trend was already pointing down. After a crash this big, the stock often bounces for a day or two as bargain hunters step in, but those bounces tend to fade quickly when the underlying story hasn't changed. Shorting into that bounce, with a tight stop, captures the likely next leg lower. The broader market is also grappling with a Fed governor warning she's ready to raise rates if inflation sticks around, which adds pressure to high-priced growth names.