Zscaler Rallies Hard — Bernstein Leads the Charge

Positioning is not the story this week. Short interest on ZS is light at roughly 4.1% of free float — it has actually fallen about 7% over the past month, unwinding a short position that was closer to 7 million shares in mid-August. The borrow market reflects the same picture: availability is exceptionally loose at over 4,000% of shares already borrowed, meaning shares-to-borrow are plentiful. Cost to borrow, while technically up about 25% on the week, remains a negligible 0.36% — this is a very easy name to short, but few want to be. The put/call ratio at 0.78 is fractionally above its 20-day average of 0.77, essentially neutral and not signalling any unusual hedging demand. Overall, the lending and options picture is benign — there is no squeeze dynamic and no elevated defensive positioning.

The insider register adds a small note of caution. Multiple officers sold in the week of September 15-21, with the CFO Kevin Rubin clearing $1.1m and the CEO Jagtar Singh Chaudhry selling $550k — both outside a 10b5-1 plan, making them discretionary rather than scheduled disposals. The CLO and CPO also sold, though those were plan-based. Net insider activity over the past 90 days runs to roughly -$6.7m. That said, the CEO remains ZS's second-largest reported holder with a 16.5% stake, so the scale of these sales is marginal relative to overall exposure. The Vanguard Group's 13G filing from March noted a reduction from 7.18% to 0%, though BlackRock filed a fresh 13G in July disclosing a 5.1% stake — as with all 13D/G disclosures, these are event-driven around the 5% threshold and may not reflect current positions.

The stock's recent earnings history warrants attention ahead of the next event on October 6. The September 3 Q4 report produced a one-day decline of 1.7% and a five-day loss of 5.4%, while the prior release in June saw a sharper one-day drop of 8.3% with a five-day follow-through of -14%. Both prints were negative despite the stock ultimately re-rating higher. The pattern — sell the news, then recover on revisions — is what the past two months have played out, with the stock rallying nearly 16% over the past month. Peer action this week was broadly supportive: CRWD added 3.1%, NTSK gained 6.2%, and RBRK climbed 8% — suggesting the cybersecurity complex overall found a bid, which gave ZS a rising-tide tailwind beyond its own specific catalyst.

With the next earnings event two weeks away and consensus targets now clustered near the current price, the question entering October is whether the revised growth narrative — particularly around new AI and agentic security products — can justify a re-rating above the $210–$215 range where much of the Street now sits.