Palo Alto Networks' Upcoming Earnings: Short-Term Trading Opportunities With Specialized ETFs

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Palo Alto Networks' (PANW) Q3 2025 earnings report (May 19th after market close) comes during a period of strong spending throughout network security markets. Investors will focus on subscription revenue growth, cloud security adoption rates, and updates on the company's AI security products. With PANW shares up approximately 3.6% year-to-date and outpacing many tech peers, traders will watch for results that justify the stock's current valuation multiples.

Additionally, analysts will examine competitive positioning against other security firms, ongoing software-as-a-service transformation progress, and executive commentary on federal spending patterns. Network security and cloud protection remain central to Palo Alto's growth narrative alongside its expanding endpoint protection offerings.

As a $124 billion market cap cybersecurity leader, PANW typically experiences notable stock moves following quarterly announcements. Traders eyeing these earnings-driven price shifts can use Direxion's Single Stock Daily Leveraged & Inverse ETFs as tactical instruments for short-term trading approaches.

Q3 2025 Financial Expectations

Analysts project Palo Alto Networks to post adjusted earnings of $0.41 per share, representing a 6.8% decrease from $0.44 in the same quarter last year. The company approaches this report after exceeding Wall Street estimates in three of the past four quarters, including Q2's 3.8% earnings beat when it reported $0.81 versus the $0.78 expected.

Revenue will draw particular attention after last quarter's 14% year-over-year increase to $2.26 billion. The analyst community will closely monitor any adjustments to Palo Alto's previously issued fiscal year 2025 revenue guidance of $9.14-$9.19 billion, which was raised during the February earnings call.

Recent Quarterly Performance

Palo Alto Networks stock dipped slightly after its Q2 2025 report despite delivering adjusted EPS of $0.81 and revenue of $2.26 billion, both exceeding expectations. The company's subscription and services segments grew 16% year-over-year, while product revenue showed more modest gains.

Looking forward, Wall Street forecasts adjusted EPS of $1.76 for fiscal 2025, with expectations for further growth to $2.08 in fiscal 2026—representing an ~18.75% increase. This projected growth reflects Palo Alto's expanding footprint in cloud services and its ongoing transition to a more subscription-based revenue model.

Wall Street Outlook

Analyst sentiment on Palo Alto Networks remains broadly favorable, with consensus ratings tilted toward "Buy" recommendations. According to recent data, 33 of 47 analysts covering the stock have issued "Strong Buy" ratings, 2 recommend "Moderate Buy," 11 suggest "Hold," with 1 advising "Sell."

The average price target stands at $212.41, with estimates ranging from $130 to $235, suggesting potential upside from current levels around $189. This projected appreciation indicates that analysts expect continued momentum in Palo Alto's core businesses despite growing competition from both legacy vendors and newer security startups.

Trading Palo Alto Networks' Earnings With Specialized ETFs

PANW's quarterly announcements typically trigger stock movement as investors evaluate subscription growth, margin performance, and outlook updates. Traders with convictions about the upcoming report can utilize Direxion's recently launched ETF products to establish leveraged long positions for potential earnings beats or inverse exposure for possible disappointments.

These ETFs allow active market participants to implement precise strategies during earnings season without needing margin accounts or short-selling capabilities.

Leveraged ETF Trading Options

Direxion's Palo Alto Networks ETFs, launched in March 2025, give short-term traders magnified or inverse exposure to PANW's daily price movements.

These funds use derivatives to achieve specific daily goals, well-suited for events like earnings reports when stock prices often show heightened volatility.

Bullish Strategy: PALU

Direxion Daily PANW Bull 2X Shares (PALU) lets traders double down on potential Palo Alto performance. PALU seeks 200%, before fees and expenses, of the daily movement of PANW through a portfolio designed for enhanced exposure.

• Seeks 200% of PANW's daily performance, before fees and expenses
  • When Palo Alto rises 1%, PALU seeks a 2% gain (before fees)
  • When Palo Alto falls 1%, PALU seeks a 2% decline (before fees)
• Appeals to traders expecting strong subscription growth or favorable guidance upgrades
• Trading volume typically increases ahead of earnings
• Currently trades around 5,500 shares daily
• Designed for active traders who frequently check their holdings

Bearish Strategy: PALD

Direxion Daily PANW Bear 1X Shares (PALD) provides inverse exposure to Palo Alto without short selling. This makes PALD particularly valuable for retirement account traders unable to establish short positions in IRAs or 401(k)s.

• Seeks the inverse (-1x) of the daily performance of PANW, before fees and expenses
  • When Palo Alto drops 1%, PALD aims for a 1% gain (before fees)
  • When Palo Alto rises 1%, PALD aims for a 1% loss (before fees)
• Well-suited for traders anticipating revenue misses or margin pressure
• Enables retirement account holders to express bearish views within retirement accounts
• Currently trades with lower volume than its bullish counterpart
• Functions as a tactical hedging tool for existing Palo Alto positions

Both PALU and PALD reset daily and perform best as short-term trading vehicles rather than long-term holdings. These products require active management and are designed for traders familiar with leverage mechanics and daily reset impacts. 

Remember that this represents Palo Alto Networks' fiscal third quarter ending April 30th, as the company follows a July 31 fiscal year end. The May 19th report will provide important indicators of full-year performance with just one quarter remaining in fiscal 2025.

*Short-selling is a trading strategy where investors borrow shares and sell them, hoping the stock price will fall.

Investing in the funds involves a high degree of risk. Unlike traditional ETFs, or even other leveraged and/or inverse ETFs, these leveraged and/or inverse single-stock ETFs track the price of a single stack rather than an index, eliminating the benefits of diversification. Leveraged and inverse ETFs pursue daily leveraged investment objectives, which means they are riskier than alternatives which do not use leverage. They seek daily goals and should not be expected to track the underlying stock's performance over periods /anger than one day. They are not suitable for all investors and should be utilized only by investors who understand leverage risk and who actively manage their investments. The Funds will Jose money if the underlying stock's performance is flat, and it is possible that the Bull Fund will Jose money even if the underlying stock's performance increases. and the Bear Fund will lose money even if the underlying stock's performance decreases, over a period longer than a single day. Investing in the Funds is not equivalent to investing directly in PANW.

An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. A Fund’s prospectus and summary prospectus contain this and other information about the Direxion Shares. To obtain a Fund’s prospectus and summary prospectus call 866-476-7523 or visit our website at direxion.com. A Fund’s prospectus and summary prospectus should be read carefully before investing.

The Funds have derived all disclosures contained in this document regarding Palo Alto Networks, Inc. from publicly available documents. In connection with the offering of each Fund’s securities, neither the Funds, the Trust, nor the Adviser or any of its respective affiliates has participated in the preparation of such documents. Neither the Funds, the Trust nor the Adviser or any of its respective affiliates makes any representation that such publicly available documents or any other publicly available information regarding Palo Alto Networks, Inc. is accurate or complete. Furthermore, the Funds cannot give any assurance that all events occurring prior to the date hereof (including events that would affect the accuracy or completeness of the publicly available documents described above) that would affect the trading price of Palo Alto Networks, Inc. have been publicly disclosed. Subsequent disclosure of any such events or the disclosure of or failure to disclose material future events concerning Palo Alto Networks, Inc. could affect the value of a Fund’s investments with respect to Palo Alto Networks, Inc. and therefore the value of the Funds.

Direxion Shares Risks – An investment in a Fund involves risk, including the possible loss of principal. Each Fund is non-diversified and includes risks associated with a Fund concentrating its investments in a particular security, industry, sector, or geographic region which can result in increased volatility. A Fund’s investments in derivatives such as futures contracts and swaps may pose risks in addition to, and greater than, those associated with directly investing in securities or other investments, including imperfect correlations with underlying investments or the Fund’s other portfolio holdings, higher price volatility and lack of availability. As a result, the value of an investment in a Fund may change quickly and without warning.

Leverage Risk – The Bull Fund obtains investment exposure in excess of its net assets by utilizing leverage and may lose more money in market conditions that are adverse to its investment objective than a fund that does not utilize leverage. A total loss may occur in a single day. Leverage will also have the effect of magnifying any differences in the Fund’s correlation with PANW and may increase the volatility of the Bull Fund.

Daily Correlation Risk – A number of factors may affect the Bull Fund’s ability to achieve a high degree of correlation with PANW and therefore achieve its daily leveraged investment objective. The Bull Fund’s exposure to PANW is impacted by PANW’s movement. Because of this, it is unlikely that the Bull Fund will be perfectly exposed to PANW at the end of each day. The possibility of the Bull Fund being materially over- or under-exposed to PANW increases on days when PANW is volatile near the close of the trading day.

Daily Inverse Correlation Risk – A number of factors may affect the Bear Fund’s ability to achieve a high degree of inverse correlation with PANW and therefore achieve its daily inverse investment objective. The Bear Fund’s exposure to PANW is impacted by PANW’s movement. Because of this, it is unlikely that the Bear Fund will be perfectly exposed to PANW at the end of each day. The possibility of the Bear Fund being materially over- or under-exposed to PANW increases on days when PANW is volatile near the close of the trading day.

Palo Alto Networks, Inc. Investing Risk – Issuer-specific attributes may cause an investment held by the Fund to be more volatile than the market generally. Palo Alto Networks, Inc. faces risks associated with: development of new products and services may be difficult; may be unable to attract new customers; reliance on channel partners; credit and liquidity risk of customers; sales to government entities may be subject to greater scrutiny; intense competition; among other risks.

Information Technology Sector Risk — The value of stocks of information technology companies and companies that rely heavily on technology is particularly vulnerable to rapid changes in technology product cycles, rapid product obsolescence, government regulation, and competition, both domestically and internationally, including competition from competitors with lower production cost.

Additional risks of each Fund include Effects of Compounding and Market Volatility Risk, Derivatives Risk, Counterparty Risk, Rebalancing Risk, Intra-Day Investment Risk, Concentration Risk, Market Risk, Non-Affiliation Risk, Security Volatility Risk and Cash Transaction Risk. Additionally, for the Direxion Daily PANW Bear 1X Shares, Shorting or Inverse Risk.  Please see the summary and full prospectuses for a more complete description of these and other risks of a Fund.

ALPS Distributors, Inc.

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