Palo Alto Networks Inc. stock tumbled more than 26 per cent on Wednesday after softer client spending and steep promotions forced the cybersecurity company to cut its annual billings forecast for the year.
With more than 26 per cent decline in shares, Palo Alto is on course to erase nearly $30 billion in market capitalization.
The Santa Clara, California-based Palo Alto forecast third quarter billings between $2.30 billion and $2.35 billion.
Its revenue for the second quarter ended January 31 rose about 19 per cent to $1.98 billion.
The company earned profit of $1.46 per share in the second quarter.
The forecast also sparked a selloff in other cybersecurity stocks.
Shares of Fortinet , Zscaler and Crowdstrike Holdings fell between 5 per cent and 14.9 per cent.
Cybersecurity firms are combining their offerings into a unified platform to cater to customers that are tired of buying products from different vendors and still facing security breaches.
At 11:23 a.m. ET, the Dow Jones Industrial Average was down 35.60 points, or 0.09 per cent, at 38,528.20, the S&P 500 was down 4.60 points, or 0.09 per cent, at 4,970.91, and the Nasdaq Composite was down 67.51 points, or 0.43 per cent, at 15,563.28.
On Tuesday, the stock ended at $366.09.
The results also took a hit from a slowdown in the company’s business which caters to the US federal government.
“We had a significant shortfall in our U.S. federal government business. We expect this trend will continue into our third and fourth quarter,” Arora said.
The company should revert back to its original expectations of mid-to-high double-digit billings growth towards the second half of 2025, he added.
The cybersecurity company also cut its annual billings to a range of $10.1 billion to $10.2 billion from its prior expectations of $10.7 billion to $10.8 billion.
At least 18 brokerages cut their price targets on the Palo Alto stock.
(With inputs from Reuters)
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Published: 21 Feb 2024, 11:20 PM IST