In This Article:
What Happened?
Shares of cyber security company SentinelOne (NYSE:S) fell 10.4% in the afternoon session after the company reported underwhelming first-quarter 2025 results (fiscal 2026): ARR, revenue, operating profit, and EPS were all roughly in line with expectations, which we've seen is rarely good enough for higher-multiple software companies. Additionally, the company's revenue guidance for next quarter slightly missed.
Management raised concerns about elongated sales cycles, shifting some deals into the next quarter, especially for larger enterprise deals, which weakened net new ARR growth. This continued the trend of softer earnings from cybersecurity companies, which were thought to be mostly immune to tariff-related macroeconomic weakness. Overall, this quarter could have been better.
The shares closed the day at $17.39, down 11.6% from previous close.
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 23 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 6 months ago when the stock dropped 15% on the news that 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.
SentinelOne is down 22.9% since the beginning of the year, and at $17.40 per share, it is trading 39.3% below its 52-week high of $28.68 from December 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 $409.41.
Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefiting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.