Why Zscaler Stock Could Be Ready to Bounce After a 30% Selloff

Shares of Zscaler Inc. (NASDAQ: ZS) have been going through a rough patch, sliding nearly 30% in just a few weeks and bringing one of the market’s hottest cybersecurity stocks crashing back to earth. It’s a sharp reversal for a name that had rallied almost 100% since April and looked to be cementing itself as a long-term growth story. However, right now the chart looks broken, sentiment is shot, and the bears have been running wild. 

Yet despite that, many analysts continue to see a compelling long-term opportunity and haven’t been afraid to say so. As we head into the final few weeks of the year, this tug-of-war makes Zscaler one of the more interesting setups heading into 2026. Let’s jump in and take a closer look. 

Zscaler Stock Hit Hard Despite Strong Revenue Growth

The company’s most recent earnings, released in late November, told a story familiar to the enterprise tech sector: headline beats overshadowed by continuing operating losses.

Revenue growth was solid, guidance was better than expected, but the lack of profitability once again dominated the narrative. Given the stock had already been under pressure as part of the broader market selloff through much of last month, this report was icing on the cake for the bears, who wasted no time in sending it even lower.  

Even though Wedbush called the results “robust,” it didn’t stop the slide. Investors focused instead on valuation, questioning whether a company running at an operating loss could justify a premium multiple in a risk-sensitive market.

Then there were negative updates to ratings from the likes of Bernstein, who downgraded the stock, calling Zscaler’s story “challenged” and warned that its growth potential no longer looked secure. Needless to say, it must have been a rough Thanksgiving weekend for all involved at Zscaler.

Technical Breakdown Creates Uncertainty—and Opportunity

There’s no denying that Zscaler’s chart looks terrible right now. Having started its slide from around $330, there was very little resistance until shares were below $240. But what’s interesting is that they started bubbling around that level more than a week ago, and have refused to go lower since.

With the selling volume starting to fade, that lack of follow-through conviction is now starting to flip sentiment. The moving average convergence divergence (MACD) indicator is on the verge of a fresh bullish crossover, while the relative strength index (RSI) is turning up sharply from oversold territory—both technical signs that momentum may be shifting back toward the bulls.

For longer-term investors who love getting in at a bargain, this kind of price action is attractive. Zscaler isn’t in full reversal mode yet, but if buyers continue to defend the $240 area, the groundwork for a recovery rally could already be in place.

Analyst Support Underscores Long-Term Potential

Backing up this theory is that despite the carnage on the chart and notes of caution from certain analysts, the vast majority of the analyst community hasn't lost confidence. This month has already seen the team at Citigroup reiterate its Buy rating, joining a long list of firms that backed Zscaler’s long-term story in the wake of last month’s results. 

The likes of Berenberg Bank, Robert Baird, Cantor Fitzgerald, and UBS Group all refreshed bullish ratings and price targets after the earnings release. Some now see the stock heading as high as $390, suggesting potential upside of nearly 60% from where it’s trading today.

Key Factors to Watch Into 2026

There’s a sense among the analysts that this is a temporary reset rather than the start of a bigger collapse. The company’s pipeline remains strong, customer retention is high, and its new growth initiatives should drive meaningful earnings expansion through 2026. With profitability expected to arrive within the next year or so, the argument that Zscaler is too expensive starts to lose weight quickly.

The key level to watch is still $240. If Zscaler can hold above it through next week, the technical case for a rebound strengthens considerably. A sustained move back toward $280 would confirm that the worst of the selling is over. Investors should also keep an eye on updates around profitability targets and enterprise spending trends, both of which could serve as catalysts for a re-rating in early 2026.

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