Here's Why Palo Alto Networks Slumped 18% in December
Palo Alto Networks (NASDAQ: PANW) dropped 17.9% in December over mounting concerns about growth in the cybersecurity industry. The company had no major negative company-specific news during the month. However, investors are gathering a clearer picture of industry dynamics as more companies report quarterly results. These stocks tend to have expensive valuations and are prone to volatility whenever the outlook sours.
Around mid-November, Palo Alto Networks reported its quarterly earnings, which investors generally received positively. Throughout December, investors analyzed earnings reports from several of its notable industry peers, including Zscaler, CrowdStrike, Okta, SentinelOne, and BlackBerry. Cybersecurity remains one of the highest-growth industries in the market, but the trend across these quarterly reports suggests growth is slowing and sales cycles are getting longer.
These stocks have maintained relatively high valuation ratios, despite tumbling throughout the bear market. So any indication of trouble on the horizon will likely cause a sell-off. Investors had hoped Palo Alto Networks and its peers would be relatively insulated from global macroeconomic weakness as the need to handle digital threats and data security remained urgent. Lukewarm management commentary during earnings calls, combined with sweeping layoffs across the tech sector, have cast doubt on the growth narrative.
Source Fool.com
