The recent volatility in Zscaler (ZS) stock stems from two distinct events occurring in the last four days of February 2026. While the stock's performance on February 24 and February 25 showed recovery, a significant market-wide sell-off on February 23 and an immediate post-earnings dip on February 26 have countered those technical gains.
Why the 10% Dip (February 23, 2026)
On Monday, February 23, 2026, ZS shares fell 10.31% (closing at $143.28) primarily due to macroeconomic factors rather than company-specific financial failures:
- Global Tariffs: The White House announced a surprise plan to raise global tariffs to 15%, triggering a massive sell-off across the Nasdaq and S&P 500.
- AI Sector Pressure: General investor anxiety regarding the impact of artificial intelligence on the software industry contributed to a broader tech sector downturn.
Q2 2026 Earnings Paradox (February 26, 2026)
Following the market close on Thursday, February 26, 2026, Zscaler reported strong results that beat Wall Street estimates across the board, yet shares fell between 5% and 6% in after-hours trading:
- Performance: Adjusted EPS of $1.01 (vs. $0.89 expected) and Revenue of $815.8 million (vs. $799 million expected).
- Why the Drop? Despite raising full-year ARR guidance to 24%, investors remained focused on a widening GAAP net loss of $34.3 million (compared to $7.7 million a year ago) and a sharp decline in free cash flow margin to 20.7% from over 50% in the previous quarter.
Technical Context (Moving Averages)
Your observation regarding the 8-day moving average aligns with the "relief rally" seen on February 24 (+4.24%) and February 25 (+0.94%).
- The stock's recovery to $155.70 on Feb 25 placed it briefly in a stronger technical position following the tariff-induced crash.
- However, the after-hours drop following the Feb 26 report suggests that fundamental concerns over GAAP losses and cash flow margins are currently outweighing the short-term technical "effort" to stay above the 8-day average.
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