Palo Alto Networks: Change in strategy as an opportunity for entry?

Last Updated: 7. März 2024By

Do you know Nancy Pelosi? The former Speaker of the US House of Representatives is considered a legend by many investors. Most recently, she made headlines with the acquisition of a stock position.

$1.25 million for options of cybersecurity companyAccording to media reports, the US politician bought options on Palo Alto Networks, a cybersecurity company, for around $1.25 million, despite a weak outlook. After the stock declined by around 30%, Pelosi apparently saw a favorable opportunity to enter the market.

Free usage periods to attract customersPalo Alto aims to advance its platform strategy. The company offers free usage periods of its tools to give customers the opportunity to reduce their dependence on other security providers. This is expected to put further pressure on the revenue figures of the cybersecurity specialist in the coming months. However, in the long term, growth is expected to accelerate.

Recurring revenue of $15 billionAs cyber risks increase with the advancement of digitalization and the number of targets for hackers continues to grow, Palo Alto expects to generate annual recurring revenue of $15 billion by fiscal year 2030. The company still has a lot of pricing power and can therefore afford to slow down its billing growth in order to bind more customers to its ecosystem in the long term.

Palo Alto Networks stock in weekly chart – ISIN: US6974351057Source:

Technical perspectiveThe reaction to the quarterly forecast caused a setback to the 40-week line (blue) after the stock had previously shown a strong performance. However, this may have been an overreaction, as the cyber security company’s stock was able to recover from its low. The stabilization of the stock, which is not exactly cheaply valued, may take some time.

ConclusionThe longer-term prospects for the cybersecurity specialist remain intact. Investors who can handle a temporary setback may follow the example of the US politician and add a few shares to their portfolio. Those who are less risk-averse may wait for the stock to stabilize before investing.