Why SentinelOne Stock Is Sinking Today

Key Points

• SentinelOne stock is falling due to a report that Palo Alto Networks is close to acquiring CyberArk Software.

• A report from earlier this month suggested that Palo Alto was on the verge of buying SentinelOne.

• SentinelOne stock will likely see some significant near-term moves in conjunction with news surrounding Palo Alto Networks.

• 10 stocks we like better than SentinelOne ›

SentinelOne (NYSE: S) stock is heading lower Tuesday. The cybersecurity specialist's share price was down 4.4% as of 3:30 p.m. ET along with declines of 0.3 % for the S&P 500 and the Nasdaq Composite. The stock had been off as much as 6.7% earlier today.

SentinelOne stock is slipping due to a report from The Wall Street Journal that Palo Alto Networks is poised to acquire CyberArk Software. A different report published earlier this month suggested that Palo Alto was going to acquire SentinelOne, so it's possible today's news makes that potential buyout less likely.

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A suitor gone?

Israel-based news outlet Calcalist published a report earlier this month stating that SentinelOne was on the verge of being acquired by Palo Alto Networks, but it now looks like CyberArk Software may actually be the company that is in Palo Alto's buyout crosshairs. Both SentinelOne and CyberArk are headquartered in Israel, and it's possible that Calcalist's buyout report was correct in the sense that Palo Alto was on the verge of buying one of the country's cybersecurity specialists -- but wrong about which one.

What's next for SentinelOne?

Even with today's valuation pullback, SentinelOne stock is still up big since Calcalist reported that the company would soon be acquired by Palo Alto. While Palo Alto buying CyberArk wouldn't necessarily mean that the company isn't going to acquire SentinelOne, a deal with CyberArk could make it less likely that other big buyouts happen in the near term. SentinelOne doesn't necessarily have to be bought out in order to deliver strong returns for long-term shareholders, but the company's share price could fall in the near term if it becomes clear that Palo Alto isn't stepping up with a big buyout offer.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends SentinelOne. The Motley Fool recommends Palo Alto Networks. The Motley Fool has a disclosure policy.