Friday, 6 December 2024
by BD Banks
SentinelOne (NYSE: S) stock is losing ground in Thursday’s trading. The cybersecurity company’s share price was down 9.2% as of noon ET. Meanwhile, the S&P 500 (SNPINDEX: ^GSPC) was flat, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) was up 0.1%.
After the market closed yesterday, SentinelOne published its third-quarter earnings results. While the company posted sales that beat Wall Street’s target, it also posted a wider-than-anticipated loss — and management’s forward guidance appears to have underwhelmed investors.
SentinelOne posted a loss of $0.25 per share on sales of $210.6 million in the third quarter. For comparison, the average analyst estimate had called for a loss of $0.20 per share on sales of roughly $209.7 million. Revenue was up approximately 28% year over year in the quarter, and the business closed out the period with its first positive free cash flow across a trailing-12-month (TTM) stretch.
In conjunction with its Q3 report, SentinelOne raised its full-year guidance. The company now expects sales of roughly $818 million for the period — up from its previous guidance for sales of $815 million. It also issued guidance for sales of $222 million in the fourth quarter — topping the average analyst estimate’s call for revenue of $220 million. But while the company increased its revenue target for the full-year period and beat the average Wall Street target for Q4 revenue, it appears that some investors were looking for stronger performance.
SentinelOne’s wider-than-expected loss in Q3 raises questions about cost structures and resource utilization as the company scales. In the wake of a massive IT outage triggered by an update rolled out by cybersecurity rival CrowdStrike, some investors and analysts have been hoping that SentinelOne would easily soak up some of its competitor’s business. But the company’s Q3 performance and forward guidance suggests that the company hasn’t been able to cut back as much on marketing initiatives, and revenue expansion has not been as strong as some had hoped.
SentinelOne may still be able to solidify itself as a long-term winner in the cybersecurity space, but the short-term trade on the heels of CrowdStrike’s missteps appears to be weakening.
Before you buy stock in SentinelOne, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and SentinelOne wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $889,433!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of December 2, 2024
Keith Noonan has positions in CrowdStrike. The Motley Fool has positions in and recommends CrowdStrike. The Motley Fool has a disclosure policy.