Cybersecurity stocks sell off, holding up Nasdaq, but 1 tech stock is rising.


of Nasdaq Composite Index (^IXIC 0.41%) Today, August 4th, is flat at 2:15 PM. It’s a bit of a rebound day for many tech stocks that have stumbled after earnings in recent days. However, the most popular cyber security stocks are determined not at all Having a good day after the release of second quarter earnings Fortinet (FTNT -16.33%) Wednesday afternoon. At the time of writing, Fortinet shares are down about 17 percent Palo Alto Networks (PANW -5.17%), CrowdStrike (CRWD -3.11%)And Zscaler (ZS -2.00%) Shares fell 5.4% to 3.3% on the day.

One of today’s best-performing Nasdaq stocks is the Latin American payments and e-commerce leader. Free market (Melly 16.16%). Shares rose 16 percent after the company reported second-quarter results that investors liked.

Fortinet: Investors say after guidance, cash flow is weak.

Cybersecurity stocks, as a group, have fared better than many sectors of high-growth technology stocks this year. So far this year, Palo Alto Networks and CrowdStrike shares are down about 22 percent, while Fortinet shares are down 27 percent. Before today, three of them were teenagers this year, no nice Result, but definitely Less bad In 2022 from several technology stocks. One key reason is that cyber security is becoming increasingly important to all types of organizations. As digital transformation increases, data security is a necessity, not a luxury, and investors see these companies’ prospects as more stable and less likely to be buffeted by the economic climate.

However, Fortinet’s second quarter earnings report — or more specifically management’s Q3 guidance — may have put some cracks in the wall. The company expects revenue of $1.12 billion this quarter, falling short of what Wall Street analysts had estimated in their models. The result is fueling today’s sell-off as investors worry that growth may slow even in cybersecurity. With many of the top stocks in the market still reporting GAAP losses and some still burning through cash, investors are taking a step back to reassess things.

Mercado Libre: Payments grow in triple digits, e-commerce up 23%.

Latin America’s leading online shopping and payment platform saw revenue increase 57 percent to $2.6 billion adjusted for foreign exchange differences. Operating income rose 51 percent, while earnings per share rose 77 percent. The company has beaten Wall Street’s best estimates, both above and below, because customers are buying more items from online stores and paying more for those items using Mercado Pago. And To pay for additional things outside the company platform.

Investors are now worried about Mercado Libre’s future, with the report coming after many US e-commerce companies reported less-than-impressive sales growth. While it may not be in its infancy yet, e-commerce and digital payments are still here. a lot of They have already expanded in Latin America and MercadoLibre is the undisputed leader there.

Looks like an opportunity for buyers

Today’s selloff in cybersecurity stocks and strong results from Mercado Libre highlight opportunities for long-term investors. While the sellers see cracks in the potential foundation of cybersecurity, the reality is that the script remains very strong and investors who think (and act) over several years should consider buying shares of leaders like CrowdStrike, Fortinet, and Zscaler. On days like today. For Mercado Libre, even with today’s gains, the shares still trade at some valuation based on their low returns over the years.

Jason Hall has positions in Fortinet, MercadoLibre and Zscaler. He has a position in The Motley Fool and recommends CrowdStrike Holdings, Inc., Fortinet, MercadoLibre, Palo Alto Networks and Zscaler. The Motley Fool has a disclosure policy.





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