Zscaler (NASDAQ:ZS) Shares Down 5.6% – Should You Sell?

Zscaler, Inc. (NASDAQ:ZS) shares fell 5.6% on Tuesday . The company traded as low as $159.75 and last traded at $160.23. 718,379 shares were traded during mid-day trading, a decline of 79% from the average daily volume of 3,358,175 shares. The stock had previously closed at $169.80.

Key Headlines Impacting Zscaler

Here are the key news stories impacting Zscaler this week:

• Positive Sentiment: Strong fiscal fourth-quarter results: Zscaler reported revenue of approximately $898.2 million, up 25% year over year, while annual recurring revenue rose 25% to $3.771 billion. ARR growth and earnings above analyst expectations reinforced demand for the company’s cloud-security platform. Zscaler reported revenue and ARR growth
• Positive Sentiment: AI-security product launch: Zscaler introduced Agentic SOC, which combines its zero-trust telemetry with specialized AI agents to detect, investigate and respond to threats automatically. The product uses models from OpenAI and Anthropic and is designed to address rising AI-driven cyberattacks. Zscaler launches Agentic SOC
• Positive Sentiment: Flexible-contract adoption: Z-Flex generated more than $1.7 billion in fiscal 2026 total contract value and helped lift customer ARR nearly 30%, suggesting that flexible purchasing terms may accelerate broader adoption of Zscaler’s security platform. Zscaler’s Z-Flex growth
• Neutral Sentiment: AI-security enthusiasm spread across the sector: Cloudflare’s security tie-up with OpenAI boosted investor interest in AI-related cybersecurity companies, providing a positive read-through for Zscaler’s Agentic SOC launch, although the partnership was not directly announced by Zscaler. Cloudflare OpenAI security partnership
• Negative Sentiment: Growth and profitability concerns: Analysts flagged decelerating revenue and ARR growth, higher capital spending and weaker cash-flow margins. A planned workforce reduction may improve efficiency, but also signals management is seeking to control costs as growth moderates. Zscaler stock growth concerns

Wall Street Analysts Forecast Growth

Several brokerages recently commented on ZS. Zacks Research downgraded shares of Zscaler from a “hold” rating to a “strong sell” rating in a research report on Thursday, September 3rd. Cantor Fitzgerald reiterated an “overweight” rating and set a $225.00 price objective on shares of Zscaler in a research report on Friday, September 4th. Stifel Nicolaus boosted their target price on shares of Zscaler from $175.00 to $200.00 and gave the company a “buy” rating in a research note on Wednesday, August 19th. Wedbush reiterated an “outperform” rating and set a $220.00 price target on shares of Zscaler in a report on Wednesday, June 10th. Finally, TD Cowen reissued a “buy” rating and set a $200.00 price target on shares of Zscaler in a research report on Friday, September 4th. Thirty-four analysts have rated the stock with a Buy rating, six have given a Hold rating and two have assigned a Sell rating to the company. According to data from MarketBeat, the company presently has an average rating of “Moderate Buy” and an average price target of $216.65.

Zscaler Price Performance

The company has a market capitalization of $27.08 billion, a PE ratio of -425.90, a P/E/G ratio of 61.32 and a beta of 0.95. The company has a debt-to-equity ratio of 0.65, a quick ratio of 1.70 and a current ratio of 1.70. The stock has a 50 day moving average price of $162.71 and a two-hundred day moving average price of $150.23.

Zscaler (NASDAQ:ZS) last released its quarterly earnings data on Thursday, September 3rd. The company reported $1.19 EPS for the quarter, topping analysts’ consensus estimates of $1.09 by $0.10. The firm had revenue of $898.19 million for the quarter, compared to the consensus estimate of $876.96 million. Zscaler had a positive return on equity of 1.23% and a negative net margin of 1.88%.The firm’s revenue was up 24.9% on a year-over-year basis. During the same quarter in the prior year, the company posted $0.89 earnings per share. Zscaler has set its FY 2027 guidance at 4.860-4.900 EPS and its Q1 2027 guidance at 1.150-1.160 EPS. Equities analysts forecast that Zscaler, Inc. will post 0.19 earnings per share for the current year.

Insider Buying and Selling at Zscaler

In other Zscaler news, insider Adam Geller sold 2,817 shares of the stock in a transaction on Monday, June 22nd. The shares were sold at an average price of $122.60, for a total transaction of $345,364.20. Following the transaction, the insider directly owned 42,314 shares of the company’s stock, valued at $5,187,696.40. This represents a 6.24% decrease in their ownership of the stock. The transaction was disclosed in a filing with the SEC, which is available through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CEO Jagtar Chaudhry sold 2,878 shares of the firm’s stock in a transaction dated Tuesday, June 16th. The shares were sold at an average price of $126.43, for a total value of $363,865.54. Following the transaction, the chief executive officer owned 343,038 shares in the company, valued at approximately $43,370,294.34. This trade represents a 0.83% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. The sale was made to cover tax withholding obligations related to the vesting of equity awards. In the last 90 days, insiders have sold 16,772 shares of company stock worth $2,139,799. Company insiders own 17.20% of the company’s stock.

Institutional Inflows and Outflows

A number of institutional investors have recently made changes to their positions in the stock. WINTON GROUP Ltd boosted its position in Zscaler by 56.5% during the second quarter. WINTON GROUP Ltd now owns 4,890 shares of the company’s stock worth $690,000 after purchasing an additional 1,765 shares during the period. NewEdge Advisors LLC raised its position in shares of Zscaler by 7.8% in the second quarter. NewEdge Advisors LLC now owns 4,626 shares of the company’s stock valued at $653,000 after purchasing an additional 336 shares during the period. Hudock Inc. acquired a new stake in shares of Zscaler in the second quarter worth $311,000. Allworth Financial LP grew its stake in Zscaler by 7.7% in the 2nd quarter. Allworth Financial LP now owns 3,578 shares of the company’s stock valued at $505,000 after buying an additional 256 shares during the last quarter. Finally, Arizona State Retirement System raised its holdings in Zscaler by 6.4% in the 2nd quarter. Arizona State Retirement System now owns 29,965 shares of the company’s stock worth $4,230,000 after acquiring an additional 1,799 shares during the period. 46.45% of the stock is owned by institutional investors.

About Zscaler

Zscaler, Inc is a cloud-native cybersecurity company that provides security services designed to help organizations connect users, devices, applications and workloads securely over the internet. Its platform is built around a zero-trust security model, which verifies access based on identity, context and policy rather than relying primarily on a traditional corporate network perimeter.

The company’s offerings include Zscaler Internet Access, which secures access to internet and software-as-a-service applications, and Zscaler Private Access, which provides secure, policy-based access to private applications without requiring conventional virtual private networks.