Zscaler Inc. (NASDAQ: ZS) has been under heavy selling pressure since late May 2026, with ZS falling 32.4% following its third-quarter fiscal 2026 earnings report released on 26 May. As of 10 June, ZS closed at $124.73, sitting just 8.8% above its 52-week low of $114.62.

The sell-off was triggered primarily by ZS's preliminary guidance for fiscal year 2027, which projected revenue and annual recurring revenue (ARR) growth of 16% to 17% year over year. This represents a material deceleration from ZS's prior growth trajectory of mid-20s percentage growth in both metrics, implying a slowdown of approximately 800 to 900 basis points. Management attributed the more conservative outlook to sales leadership turnover, more cautious assumptions for landing new customers, and a slower-than-expected contribution from the Red Canary acquisition.

ZS has significantly underperformed its cybersecurity peers year to date. Fortinet Inc. (NASDAQ: FTNT) has gained 74.8%, Palo Alto Networks Inc. (NASDAQ: PANW) has risen 40.3%, and CrowdStrike Holdings Inc. (NASDAQ: CRWD) is up 37.8% over the same period, compared to ZS's year-to-date decline of 44.5%.

Despite the stock's decline, ZS's Q3 fiscal 2026 operating results remained solid. Revenues rose 25% to $850 million, ARR grew 25% to $3.53 billion, and remaining performance obligations (RPO) increased approximately 30% to $6.5 billion. ZS reported 748 customers generating more than $1 million in ARR and more than 4,000 customers contributing more than $100,000 in ARR.

ZS's forward 12-month price-to-sales ratio has fallen to 5.27x, compared to an industry average of 14.75x and well below peers including CRWD at 25.70x, PANW at 16.02x, and FTNT at 12.48x. The stock currently carries a Zacks Rank of 3 (Hold).