Zscaler reports its next earnings print today, September 3, with the stock having already absorbed a sharp post-earnings drop from September 1 and now trading at $172.73 — up 14% over the past month but down 3.2% in the most recent session.
The short story heading into this print is one of persistent exit, not accumulation. Short interest has fallen nearly 24% over the past month, dropping from roughly 8.3 million shares at the start of August to approximately 6.2 million now — just 3.9% of the free float. The borrow market is equally uncongested. Availability is at 8,220%, meaning there are more than 82 shares available to borrow for every one currently lent out. Cost to borrow is 0.37%, low by any measure. The lending pool is essentially untouched. There is no mechanism here for a short-driven amplification of any move, in either direction.
Analyst conviction has actually strengthened into the print. JP Morgan raised its target to $215 last week, keeping an Overweight rating, while Barclays moved its target from $170 to $192, also maintaining Overweight. Earlier in the month, Wells Fargo, Keybanc, Mizuho, and TD Cowen all raised targets — the broad direction from the Street has been upward revision, not caution. The consensus mean target of $199 implies roughly 15% upside from current levels. The bull case rests on Zscaler's platform position in SASE, enterprise momentum, and an EPS growth trajectory ranked in the 89th percentile for 12-month forward estimate increases. Bears point to slowing growth rates, intensifying competition from Palo Alto Networks and Netskope, and the stock's stretched valuation — the price-to-earnings ratio is around 36x on trailing numbers, with an EV/EBITDA near 23x. EPS surprise ranking sits in just the 19th percentile, a note of caution against assuming the beat-and-raise pattern holds.
The peer group context adds some texture. CrowdStrike fell nearly 7% on the day and SentinelOne dropped 6.7%, suggesting broad sector pressure rather than anything specific to Zscaler in the most recent session. Over the week, however, CRWD is up 16% — a sharp contrast to ZS's 1.4% gain — which may reflect some relative-value repositioning within cybersecurity names after the September 1 print.
Today's report is therefore a test of whether Zscaler's guidance and revenue growth trajectory can close the gap with a Street that has already moved its targets higher — and whether the stock can sustain a re-rating after a year of meaningful underperformance.
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