Zscaler (ZS) Stock Plunges After Earnings Beat and Guidance Hike

By Staff Writer – November 29, 2025

Zscaler Inc. (NASDAQ: ZS) is back in the spotlight this week after a classic market plot twist: the cloud security leader delivered stronger-than-expected quarterly results, raised its full-year outlook… and then watched its share price tumble.

As of the latest close on November 28, 2025, Zscaler stock is trading in the mid-$250s, recovering slightly from an earnings-driven selloff of roughly 10–13% earlier in the week. That drop comes just weeks after the stock traded above $330 in early November, underscoring how quickly sentiment can swing in high-growth cybersecurity names. ^[1]

Below is a detailed breakdown of the latest Zscaler stock news and what it may mean for investors following the name on November 29, 2025.

Zscaler Stock Today: From Early-November Highs to Post-Earnings Hangover

Heading into earnings, Zscaler shares had already cooled from their early-month peak near $336, with pre-report commentary noting a roughly 17% pullback from that high as expectations built for another beat-and-raise quarter. ^[2]

After Zscaler reported results this week, several outlets noted that the stock “tanked” or “plunged”, with live earnings coverage and news feeds flagging an intraday drop of about 12–13% despite the strong headline numbers. ^[3]

Proactive Investors reported the stock falling around 12% to roughly $255 immediately after the release. ^[4]
Robinhood pricing data shows the stock trading in a $249.68–$256.25 range on November 28, finishing around $258.31, suggesting a modest rebound but still well below pre-earnings levels. ^[5]

In short, Zscaler stock today sits in a post-earnings air pocket: still up substantially over the past year, but down sharply from its recent highs as investors reassess valuation and profitability.

Inside Zscaler’s Latest Quarter: Big Growth, Bigger Expectations

Zscaler’s first quarter of fiscal 2026 (ended October 31, 2025) was objectively strong across almost every growth metric:

Revenue:$788.1 million, up 26% year-on-year, topping expectations of around $773 million. ^[6]
Adjusted EPS:$0.96, beating consensus of $0.86 and rising more than 20% versus the prior year. ^[7]
Annual Recurring Revenue (ARR):$3.204 billion, up 26% year-on-year. ^[8]
Deferred Revenue:$2.351 billion, up 32% from a year earlier, reflecting strong bookings and multi-year deals. ^[9]

The company also continues to generate substantial cash:

Operating cash flow in the quarter was reported in the hundreds of millions of dollars, with free cash flow margins staying robust, according to multiple earnings recaps. ^[10]

However, GAAP profitability remains elusive:

Zscaler recorded a GAAP net loss of about $11.6 million for the quarter, even as non-GAAP net income and adjusted EPS came in comfortably positive. ^[11]
Simply Wall St notes that the company’s trailing twelve-month net loss has narrowed to roughly $41 million, with net margin still negative at about -1.6%, despite revenue growth pushing total sales above $2.8 billion over the period. ^[12]

That combination—high growth, improving but still negative margins, and a premium valuation—sets the backdrop for the market’s skittish reaction.

Guidance: Raised for Fiscal 2026, But Tone Stays Cautious

If you only read the numbers, Zscaler’s outlook looks constructive:

Fiscal 2026 revenue guidance: now $3.282–$3.301 billion, up from prior guidance and slightly ahead of Wall Street expectations. ^[13]
Fiscal 2026 adjusted EPS: guided to $3.78–$3.82, also lifted compared with earlier forecasts. ^[14]
Q2 fiscal 2026 outlook: revenue of $797–$799 million and adjusted EPS of $0.89–$0.90, essentially in line to slightly ahead of consensus. ^[15]

Commentary from SiliconANGLE and other outlets, however, stresses that management’s guidance was more “meet or slightly beat” than “blowout”, a nuance that matters when a stock is priced for perfection. ^[16]

The result: fundamentally solid guidance but not enough upside surprise to justify Zscaler’s rich multiple in the eyes of some investors.

Why Did Zscaler Stock Drop After an Earnings Beat?

Several themes are emerging across analyst notes and news coverage to explain the post-earnings selloff:

1. Profitability Concerns and Negative Net Margins

Proactive Investors and Simply Wall St both highlight that Zscaler’s net margin is still negative and that the company remains unprofitable on a GAAP basis, even as it delivers strong revenue and ARR growth. ^[17]

Simply Wall St frames this as a tension between a “premium valuation” and the reality that profitability is still a work in progress, with consensus expecting a more sustained margin turnaround only in the coming years. ^[18]

2. A Valuation That Leaves Little Room for Disappointment

Analyst consensus tracked by Simply Wall St shows:

An average price target near $330, implying upside from current levels.
A price-to-sales ratio above 14x, significantly higher than the broader U.S. software sector. ^[19]

Commentary across several outlets suggests that some of the post-earnings drop looks like profit-taking after a strong run, with investors using the in-line guidance and persistent negative margins as an excuse to de-risk high-multiple names. ^[20]

3. “Strong, But Not Strong Enough” Narrative

Recaps from Yahoo Finance, SiliconANGLE, StockStory and others all follow a similar pattern:

Revenue and EPS beat expectations.
Guidance was raised, but only modestly.
Shares still dropped as the market demanded more upside from a stock that already trades at a hefty premium. ^[21]

In other words, Zscaler didn’t miss—investors’ expectations did.

Analyst Reactions: Wedbush Bullish, Others More Cautious

The latest Zscaler news flow also includes fresh analyst commentary:

Wedbush reiterated an “Outperform” rating with a $350 price target, calling the quarter “robust” and highlighting strong demand for Zscaler’s Zero Trust and AI Security platform, as well as rapid growth in large-ticket customers and new product lines like Z-Flex. ^[22]
Roth Capital Markets analyst Taz Koujalgi maintained a “Neutral” stance with a $215 target, according to coverage asking bluntly whether investors should consider selling Zscaler stock after the recent run-up and volatility. ^[23]
MarketWatch and other services note that UBS has adjusted its ZS price target while keeping a Buy rating, reflecting continued confidence in the long-term story but recognition of near-term valuation and sentiment risks. ^[24]

Broadly, Wall Street remains positive on Zscaler’s long-term position in cloud security and AI-driven security operations, but there is a clear divide between more aggressive bulls (who see pullbacks as buying opportunities) and valuation-sensitive investors (who worry about the path to sustained profitability).

Strategic Moves: AI Security, Zero Trust, and M&A Firepower

Beyond the numbers, recent quarters and this week’s coverage underline how Zscaler is attempting to lock in a leadership position in AI-driven zero-trust security:

The company has continued a busy M&A strategy, acquiring firms such as Avalor and Airgap in 2024 and more recently Red Canary and SplxAI, bolstering its data, segmentation, managed detection and response (MDR), and AI security capabilities. ^[25]
Zscaler is integrating these acquisitions into an AI-powered security operations center (SOC) vision, with management highlighting a growing contribution from AI security, data security, and Zero Trust “everywhere” offerings. ^[26]
Product updates such as Zscaler Digital Experience enhancements and FedRAMP-authorized data centers in London and Paris extend the company’s reach into complex global and federal environments, where security, latency and data-residency requirements are particularly demanding. ^[27]

These moves help explain why ARR, billings, and large customer metrics remain strong, even as the market punishes the stock for not flipping decisively into GAAP profitability yet. ^[28]

What Today’s Setup Means for ZS Stock

Pulling all of this together, the Zscaler stock story on November 29, 2025 looks like this:

Fundamentals: Revenue, ARR, and cash flow are growing at a healthy clip. The business is scaling, and guidance still implies solid double-digit growth. ^[29]
Profitability: GAAP net income is still negative, though losses are narrowing. Net margins remain below zero, keeping the valuation debate front and center. ^[30]
Valuation: ZS trades at a premium price-to-sales multiple and near, but below, consensus price targets after the selloff—leaving room for either recovery or further compression depending on macro conditions and execution. ^[31]
Sentiment: Earnings beat + guidance raise + double-digit share price drop is classic “priced for perfection” behavior. Analyst commentary ranges from cautiously optimistic to outright bullish, but near-term trading is likely to stay volatile. ^[32]

For investors tracking ZS stock in Google News or Discover, the key question now is less “Is Zscaler growing?” and more “How much are you willing to pay for that growth while margins are still negative?”

Bottom Line: High-Growth Cybersecurity, With High-Beta Price Action

Zscaler’s latest quarter confirms its status as one of the fastest-growing large-cap cybersecurity platforms, with strong demand for zero-trust architectures and AI-powered security operations. The company is investing aggressively, acquiring niche players, and expanding its product suite to defend that leadership. ^[33]

Yet the stock’s slide this week shows how unforgiving the market can be when a richly valued growth name delivers “only” strong results instead of spectacular ones.

Zscaler $(ZS) Just Dropped Earnings – BUY NOW or HUGE MISTAKE