Palo Alto investor sues over 28% share tumble Palo Alto Networks (PAN) is facing a proposed class action lawsuit that alleges investors were deceived about the traction of its platform tactics and hurt by an unexpectedly low billings forecast that crashed the share price. The US security biz last week reported a 19 percent bounce in sales to $1.975 billion for its Q2 …
When did people forget that the stock market is effectively gambling? Maybe you buy Apple stock when they're on the verge of bankruptcy and now it's worth several times what you paid, maybe you buy shares in BP right before they cause one of the biggest environmental catastrophes in decades. You pays your money and you takes your chances.
Unless the company knowingly gave false or deceptive info, which it doesn't sound like they did per TFA, anyone who wants to join this lawsuit can go fuck themselves.
Amen. For the sake of my sanity I dug further into the allegations and it looks to be the most frivolous whiny investor complaint I've ever seen.
- All the supposed misleading guidance/lies are hand-wavey optimism by the CEO/CFO/CPO. The kind of talk they always give in earning calls especially for a growing company ("we're excited for our new product/strategy/etc"). But you know they're always careful when you pin them down on numbers. The are no false or misleading numbers alleged to have been given.
- Alleged omissions are: They didn't say they weren't expecting to grow enough/sustainably enough/soon enough (for this particular investor's liking? - it's not clear).
Looking at actual numbers in the quarterly announcements over the claim's time period:
August 18, 2023: fiscal year 2024 expect Total revenue in the range of $8.15 billion to $8.20 billion
November 15, 2023: fiscal year 2024 expect Total revenue in the range of $8.15 billion to $8.20 billion
February 20, 2024: fiscal year 2024 Total revenue in the range of $7.95 billion to $8.00 billion but with soft Q3 revenues. This implies Q4 will be decent, which we're yet to see.
It's not even profit warning territory. That this is earth-shattering Feb 20th change in guidance caused a 28% drop in share-price is just.. a market thing. A bubble bursting, a correction, or a buying opportunity depending on your perspective. Every metric is up. This is a seriously profitable company which just experienced some stellar growth. The market got a bit carried away with how stellar, and a bit down at the reality. This is what happens when equity is trading at a PE of over 55 and people keep piling in. The higher the expected future growth the greater the uncertainty in value (because of compounding, right?) and therefore the greater the volatility in share price. Incidentally it's only down 15% as of now. Hopefully the investor didn't panic-sell.
The ass-covering risk list in the annual report is both lengthy and more than sufficient to cover this scenario/events and in particular explicitly contradicts supposed omissions, mentioning variability in growth, past not being a predictor of future growth, and the unique risks of sales to government entities.
"When did people forget that the stock market is effectively gambling?"
What's more when you buy a share you're becoming part of the company. The company is called that because "company" is a collective noun, in this case the collection of people who each own a share of the company. The clues are all there in the name. So if you're a shareholder the company's funds are your collective funds. If you are a shreholder and sue the company you're suing yourself along with all the other shareholders. If you think the C-suite or directors are gypping you, sue them, not yourself. If you're prompted to sue yourself by a lawyer remember it's the guaranteed winner who's prompting you and if you want to find out who's the loser, look in the mirror.
He actually is suing the COs as well. You sue, effectively, the pre-existing shareholders in a case like this because they're the ones theoretically responsible for putting the directors you think have wronged you in place and because the company has the means to pay the lawyers.
Even though the sums recouped by plaintiffs are rarely comparable to alleged losses it is important from a justice point of view, and as a check on the power of CEOs. Imo. That requires the frivolous suits to be thrown out the door quickly though.
Though they are still better off the the 1990's era horror of a Cisco GUI.
My current firewall is garbage, but at least the price point matches the performance. Nobody in the whole product space has done much in over a decade, but slap a few more letters in the firewall/IDS/IPS/UTM/AITA-TBS word salad. What they are selling is a 2000$ 1u server chassis with a couple bonus ASICs and a 10-20x profit multiplier not counting annual service and support fees.
Hmmm, trading vs investing. Trading is gambling as it is pure speculation even when you're arbitraging as there's lots of moving parts that affect the outcome real world vs classroom.
Investing is about analysing the financial statements, looking at the company's plans for the future, dividend history, broader market etc etc and making a considered choice. Investing is a longer term proposition - time in the market vs timing the market. It is certainly not akin to gambling. Peter Lynch, Warren Buffett et al are not gamblers, they're investors.
These people sound like they were looking for guaranteed returns that don't exist and don't like the fact their quarterly reporting will now look shit as they need to carry their investment longer term. That's the very nature of investing. You have your entry price, desired holding period, and your exit conditions pre-determined. If you cannot take a loss of any kind then stick to cash and the gradual inflation degradation that comes with it. I'm sure Buffett has a book or two they can read.
... I thought Palo were being quite bold here.
To state that they can see a future where they become less relevant and to announce a major capital investment to head that off is unusual in a publicly traded company.
Obviously it's a gamble on their part and many investors shy away from risk so quit, which drove down the price.
America being America of course someone sued.
Have a look at just how many of these legal actions happen. Most tenuous at best.
I'm more interested in what IT people think about palos strategy. Single vendor isn't something I like much personally. I do understand what palo mean about trying to glue different products together though to make a comprehensive security platform. It probably would be good if they can actually make it work.
Palo come from a disruptive background so I can see why they'd go this route. They've been a bit not radical for a while, this is their attempt to get back to where they came from.
Fortinet has been eating PAN's lunch over here.
Education and Government firewall refreshes seem to be mostly Fortinet, and PAN keep upping their subscriptions regardless.
Considering their push for security "platforms", investing in AI for detection is probably the obvious choice.
Sounds like one or two investors went all in, screwed the pooch, and are now looking for other investors to help fund the class action.
From my view palo is the best Internet firewall you can buy. Fortinet is the cheapest you can get away with.
Non Internet facing is a different game.
Palo is very expensive even compared to checkpoint.
The question though really is can palo make an integrated platform for all security devices and applications. I've largely ignored their non firewall products as I expect most others have. If they can create a unified platform I'm sure there are customers who'd take it.
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