What Happened:
Shares of cyber security company SentinelOne (NYSE:S) fell 34.9% in the after-market session after the company reported first-quarter results that missed analysts' revenue estimates. Earnings per share (EPS) beat. However, the company continued to burn cash. Guidance was also weak. Revenue guidance for the next quarter was below Consensus. Full year guidance revenue was lowered and also came in below expectations. Lowering guidance is always a worrisome sign, and the company reducing full year revenue guidance by more than 6% is also a meaningful magnitude. Additionally, operating margin guidance was maintained on the lower revenues; it would have been much more comforting had margins increased, showing that the company was perhaps prioritizing profits and efficiency over growth at all costs. Management called out a difficult macro backdrop and acknowledged that the quarter was a "tough" one. The overall results and commentary were weak, with the topline miss and underwhelming guidance providing little reason to be optimistic.
What is the market telling us:
SentinelOne's shares are very volatile and over the last year have had 54 moves greater than 5%. But moves this big are very rare even for SentinelOne and that is indicating to us that this news had a significant impact on the market's perception of the business.
SentinelOne is down 8.3% since the beginning of the year, and at $13.34 per share it is trading 54.5% below its 52-week high of $29.33 from September 2022. Investors who bought $1,000 worth of SentinelOne's shares at the IPO in June 2021 would now be looking at an investment worth $314.36.
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