Zscaler posted earnings on May 26 and the market delivered a brutal verdict: a 31.5% single-day collapse. Every data signal in the ORTEX dataset is now pointing in the same direction.
Put buying accelerated sharply ahead of the print. The put/call ratio had already climbed to 2.39 sigma above its 20-day mean by May 27 — traders were hedging into the stock's prior strength, not reacting to weakness. Post-earnings, the PCR hit 0.90, now 2.96 standard deviations above the 20-day mean of 0.67. That's the highest reading in at least a year. The options market positioned correctly, and the hedges paid off.
Short interest jumped 14.2% in a single session on May 27 — from roughly 10.2 million to 11.7 million shares. SI now stands at 7.33% of free float, up 36.5% over the past month. That's a meaningful and accelerating short position, built almost entirely in the post-earnings window. The weekly rise of 12.9% is the sharpest in at least a month.
The lending market isn't amplifying the pressure yet. Availability sits at 1,255% — over twelve times outstanding short interest — meaning borrow supply is ample and cost to borrow remains low at 0.40% APR. There's no squeeze dynamic here. Shorts can build freely without friction.
Ten firms lowered price targets on May 27, as previously reported. All maintained their ratings. The mean target now sits at $194.46 — a full 54% above ZS's current close of $126.41. The gap between the most bullish analyst ($225, UBS) and the most cautious ($145, Morgan Stanley) is extreme: the analyst recommendation divergence factor ranks at the 95th percentile of the universe.
That spread matters. Bulls see the selloff as overdone and point to Zscaler's platform depth, low churn, and the SquareX acquisition. Bears cite accelerating competition from PANW, Cisco, Cloudflare, and Netskope — and slower-than-expected platform expansion beyond ZIA and ZPA.
Peers diverged sharply on the day. CRWD fell 3.9%, PANW dropped 3.2%, and S (SentinelOne) slid 3.3% — but none came close to ZS's magnitude, suggesting the move was company-specific rather than sector-wide.
What to watch: Whether short interest continues to build in the days ahead, and whether any analyst downgrades follow the target cuts — so far, no firm has pulled a Buy.
See the live data behind this article on ORTEX.
Open ZS on ORTEX →ORTEX Market Intelligence content is generated by AI from a snapshot of ORTEX's proprietary data. Content is informational only and does not constitute investment advice.
