Should You Buy the Post-Earnings Dip in Zscaler Stock?

Zscaler (ZS) shares tanked significantly, closing down 13% on Nov. 26, even though the cybersecurity company posted exceptional financials for its first quarter. 

The selloff is puzzling particularly because ZS raised its full-year guidance as well on Wednesday. It now sees $3.29 billion in revenue on up to $3.82 per share of earnings, both ahead of consensus estimates. 

Following the post-earnings plunge, Zscaler stock is down some 25% versus its year-to-date high.

Is It Worth Buying Zscaler Stock on the Pullback?

Today’s pullback in ZS shares may have created an opportunity for long-term investors as it seems to reflect heightened expectations only, not fundamental weakness. 

Zscaler achieved what the management called the “Rule of 78” – the sum of 26% top-line growth and a remarkable 52% free cash flow margin, handily exceeding the typical Rule of 40 benchmark for SaaS companies. 

In Q1, the cybersecurity firm improved its free cash flow margin by a staggering 600 basis points on a year-over-year basis, demonstrating its ability to scale efficiently while maintaining premium growth rates. 

On Wednesday, the stock’s relative strength index (14-day) also slipped under 30, substantiating that the bearish momentum is near exhaustion now.  

What Else Makes ZS Shares Attractive for 2026

In the earnings report, Zscaler confirmed that its three strategic growth pillars are performing ahead of schedule. 

AI Security has already surpassed its fiscal 2026 target, three quarters early and expected to exceed $500 million in annual recurring revenue (ARR) by year-end. 

Additionally, the Z-Flex program generated over $175 million in total contract value bookings in Q1, representing over 70% sequential growth and demonstrating strong market demand. 

What’s also worth mentioning is that historical returns favor owning Zscaler shares heading into 2026 as well. Over the past four years, the cybersecurity firm has started the year with an average of 7.66% gain in January.

How Wall Street Recommends Playing Zscaler

Wall Street analysts also remain bullish as ever on Zscaler stock for the long term. 

According to Barchart, the consensus rating on ZS shares currently sits at “Strong Buy” with the mean target of about $329 indicating potential upside of nearly 30% from here.