Security News > 2024 > February > Palo Alto investor sues over 28% share tumble

Palo Alto Networks 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 lawsuit claims PAN made "False and/ or misleading statements" and didn't reveal that "Platformization initiatives" were not driving market share rises to a "Significant degree"; or that the corp would need to offer free products to "Entice" customers to "Adopt more of their platforms."

The company had talked of using using discounts and deferred payments terms to bring on board more customers but "That there was strong demand in the market and that Palo Alto Networks had a strong financial position and flexibility," the lawsuit adds.

On February 20, 2024, Palo Alto Networks drastically reduced its billings guidance for the third quarter, reporting expected total billings growth of 2-4 percent and revenue growth of between 13 percent and 15 percent, which Defendant Arora revealed was a result of accelerated platformization and consolidation and "Activating our AI leadership."

Defendant Arora also revealed that US federal government deals for several large projects did not close and resulted in "a significant shortfall in our U.S. federal government business." On this news, the price of Palo Alto Networks common stock declined by $104.12 per share, or approximately 28%, from $366.09 per share on February 20, 2024 to close at $261.97 on February 21, 2024.

"The decline in Palo Alto Networks' stock price is directly attributable to the announcements about the accelerated platformization and reduced guidance," the lawsuit continues.

News URL

https://go.theregister.com/feed/www.theregister.com/2024/02/28/palo_alto_class_action/