What Happened?
Shares of cyber security company SentinelOne (NYSE:S) fell 15% in the morning session after the company reported weak third-quarter results. Revenue was just in line, which usually isn't enough for a high-growth SaaS stock. In addition, operating profit missed, meaning that the revenue growth was less profitable than expected. Overall, this was a mediocre quarter, especially in light of some strong earnings results from larger software names.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy SentinelOne? Access our full analysis report here, it’s free.
What The Market Is Telling Us
SentinelOne’s shares are very volatile and have had 22 moves greater than 5% over the last year. But moves this big are rare even for SentinelOne and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 9 months ago when the stock dropped 16.7% on the news that the company reported weak fourth-quarter results and provided revenue guidance for the upcoming year, which came in below expectations, suggesting a slowdown in demand amidst an intense competitive landscape with cybersecurity peers like CrowdStrike. In addition, its net revenue retention rate of 115% missed estimates of 118%. That means its existing customers bought fewer products, and the company is more dependent on new customers (expensive to acquire) to generate growth. Guidance was also underwhelming, with the revenue projections for the next quarter and full year roughly in line with expectations. Overall, this was a tough quarter for SentinelOne.
SentinelOne is down 1% since the beginning of the year, and at $25.62 per share, it is trading 14.6% below its 52-week high of $30 from February 2024. Investors who bought $1,000 worth of SentinelOne’s shares at the IPO in June 2021 would now be looking at an investment worth $602.71.
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