Zscaler heads into its September 1 earnings window with a conflicted setup: the stock is up 7.6% on the week and 10.8% over the past month, yet short sellers have been steadily adding positions since mid-July, and options traders are the most defensively positioned they've been in weeks.
The borrow market tells a straightforward story — there is no squeeze pressure here. Availability is extraordinarily loose at 2,348%, meaning roughly 23 shares remain available to borrow for every one already lent out. Borrowing costs are negligible at 0.41%. That combination makes it cheap and easy to build or maintain a short. Short interest itself has crept up 1.9% over the past week to 5.2% of the free float — modest in absolute terms, but the direction is notable given the stock has rallied sharply. That short interest was running above 6.5% of float back in late June before a sudden step-down in mid-July, suggesting a wave of covering on the way up, followed by cautious re-entry as prices recovered. The options market adds a layer of caution: the put/call ratio has climbed to 0.78, nearly two standard deviations above its 20-day average of 0.74 — its highest reading since early in the year. That's not panic hedging, but it does suggest options traders are buying more protection than usual even as the stock rallies.
The Street remains broadly constructive, but the enthusiasm is measured. Analysts who reiterated through early June — Wedbush at $220, Cantor Fitzgerald at $225, Guggenheim at $214 — set targets well above the current $163 price. The consensus mean target is around $193. Keybanc is the most recent mover, raising its target from $176 to $185 in mid-July while keeping its Overweight rating. With the stock still trading roughly 15% below the consensus mean, bulls point to Zscaler's AgenticSecOps positioning and strong forward EPS momentum — ranked in the 91st percentile on 30-day EPS momentum and 88th on both 90-day momentum and forward EPS growth. Bears focus on execution risk: the stock is still down significantly year-to-date, and the EPS surprise factor scores only in the 18th percentile, suggesting the company has a habit of missing near-term estimates even as long-run forecasts improve. Valuation offers no obvious support — EV/EBITDA of 18.9x has compressed over the past month, but the PE of 29.7x and price-to-book of 6.3x leave little room for disappointment.
The earnings history is the most important data point in the setup. Zscaler's most recent print — May 26 — produced a 30.7% single-day collapse followed by a further 21% slide over five trading days. The one before that delivered a 19.7% gain. The stock has a well-established pattern of binary moves around results. With September 1 less than four weeks away, the current positioning — shorts rebuilding, puts at elevated levels, the stock trading below consensus targets — reflects investor memory of how dramatically Zscaler can move in either direction off a single quarterly print.
What to watch heading into the September print: whether short interest continues to build toward its late-June highs above 6.5% of float, and whether the put/call ratio pushes further above recent norms or begins to normalize as the stock consolidates around current levels.
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