Zscaler: When security becomes a growth driver

Zscaler has traversed from a high-multiple "pure-play Zero Trust" darling through a brutal 2022–23 derating into a still-volatile but more fundamentally established large-cap security platform over the last five years.

Below is a concise, event-driven 5-year timeline (roughly 2019–early 2024), with price-moving events, narrative shifts, and major technical phases.

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2019–Early 2020: Early growth darling

Zscaler was already positioned as a high-growth SaaS cybersecurity name, focused on secure web gateway and Zero Trust network access, with revenue growth well above 40% and negative GAAP earnings. The stock traded as a "next-gen security" growth story, with investors emphasizing large TAM and subscription growth rather than profits; valuation was rich versus legacy security vendors.

Key events & narrative

Multiple quarters around this period showed strong revenue growth and billings but with ongoing operating losses, reinforcing the "land-grab growth" narrative more than an efficiency story. Zscaler was talked about as a pure play on Zero Trust and cloud security, often mentioned alongside CrowdStrike and Okta in secular cloud-security baskets.

Technical phase

After its 2018 IPO, ZS rallied strongly into 2019 before experiencing a sizable correction in late 2019 as investors rotated away from the frothiest software names when growth and valuation worries flared. The stock entered 2020 off its prior highs but still substantially above IPO levels, with volatility elevated versus broader indices.

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2020: Pandemic pullback, then explosive rerating

Major price-moving events

At the onset of COVID in Q1 2020, ZS sold off with high-beta tech, but remote work and secure access needs quickly drove demand; full-year 2020 stock performance was about +322%, one of the strongest in software. The company beat on revenue through the pandemic, scaled annual revenue past $400m, and saw accelerating demand for Zscaler Internet Access and Private Access as enterprises moved users off VPN. Guidance throughout 2020 generally trended up, with the market rewarding upside on billings and new large enterprise wins, especially as Zero Trust became a budget priority.

Narrative evolution

Zscaler became a "must-own COVID beneficiary" in cybersecurity, framed as core infrastructure for secure remote access, not just a niche security tool. The narrative shifted from merely high growth to a category-defining platform with durable demand, justifying very high sales multiples.

Technical phase

After the March 2020 pandemic low, the stock entered a powerful, relatively persistent uptrend, making new highs repeatedly through late 2020. Momentum and relative strength versus broader software were notably strong, with limited deep pullbacks; 2020 became a large, sustained rally leg.

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2021: Zero Trust flagship, then late-year blow-off

Key fundamental and stock events

ZS continued >50% revenue growth, expanded its platform (Zero Trust firewall, data protection, cloud workload security) and scaled revenue toward $1B run-rate. 2021 performance was about +64%, with the stock hitting an all-time closing high near $369 in November 2021. Strong quarters, high net retention, and large-deal wins with Global 2000 customers repeatedly triggered sharp post-earnings rallies as the market paid for billings and RPO growth.

Narrative

Zscaler sat in the "elite hyper-growth security" bucket, seen as a long-duration, high-multiple compounder with a dominant position in Zero Trust. Investors largely ignored lack of GAAP profits, focusing on Rule-of-40-type metrics, with the stock regarded as a premium-priced but defensible category leader.

Technical phase

The chart showed a strong, relatively orderly uptrend into late 2021, with increasingly steep slope as speculative growth enthusiasm peaked. The November 2021 high marked a blow-off; after that, rallies became shorter and were sold more aggressively, signaling exhaustion at the top.

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2022: Massive derating and macro shock

Major price-moving events

In 2022, ZS's share price fell about 63%, one of the harsher deratings among large security SaaS as rates rose and investors rotated out of expensive growth. Even as ZS maintained strong double-digit revenue growth and rising scale (revenue crossed the ~$1B range), concerns over valuation, decelerating billings growth, and macro-impacted deal cycles drove multiple compression. Broad tech-stock drawdowns around Fed tightening and recession fears created several large downdrafts, where ZS would gap down on risk-off days even without company-specific negative news.

Narrative evolution

The narrative shifted from "hype growth leader" to "great asset but valuation problem," as investors debated whether growth could offset rising discount rates and more cautious IT budgets. Some investors began to frame ZS as a high-quality but over-owned name, where sentiment was fragile and highly sensitive to any billings or guidance wobble.

Technical phase

The stock entered a prolonged downtrend from late 2021 through most of 2022, making a series of lower highs and lower lows. Drawdowns greater than 50% from peak occurred, with several failed rally attempts at prior support zones that turned into resistance, illustrating persistent distribution.

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2023–Early 2024: Volatile recovery, then renewed skepticism

Fundamental and event drivers

2023 saw a powerful rebound, with the stock up about 101% for the year, as investors returned to quality cyber names and ZS continued >20%+ revenue growth and expanding scale (revenue above $2B TTM by FY25). Zscaler began emphasizing operating leverage: FY25 financials show revenue of $2.67B (+23.3% YoY) and net loss narrowing to about $41m, reinforcing a path toward GAAP profitability. The company continued to add products (Zero Trust firewall, AI-focused security capabilities, data protection) and executed M&A such as acquiring SquareX to enhance zero-trust browser security.

Narrative

The narrative evolved toward a more balanced "scaled security platform with solid growth and improving profitability," though still seen as a high-beta name sensitive to macro and software sentiment. At times in 2023–24, ZS was viewed as a "recovering growth compounder," but repeated post-earnings volatility around guidance and billings kept it out of the true "defensive compounder" category.

Technical phases

From late 2022 into 2023, ZS staged a strong uptrend off the lows, retracing a substantial portion of the 2022 decline as risk appetites improved. In 2024, performance turned negative (about –15% for the year), reflecting renewed pressure on high-multiple software and several sharp sell-offs after guidance or macro commentary disappointed investors.

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Late 2024–Early 2025: Topping, correction, and still-bullish long view

Recent events and drivers

Company-level results remained fundamentally strong into FY25: TTM revenue about $2.83B (+23.2% YoY), with analysts retaining a consensus "Buy" rating and a 12-month price target implying substantial upside from spot. Despite this, periods like early 2026 saw ZS sell off 20–30% from recent highs as investors reassessed rich valuations across software, particularly after quarters where strong results were paired with only "mild" or conservative forward guidance.

Narrative

The stock is now often described as a high-quality, at-scale Zero Trust platform with durable growth but meaningful valuation and skew risk, no longer a speculative early-stage story. Commentary frequently highlights Zscaler as a core cybersecurity holding alongside Palo Alto Networks, while acknowledging that sentiment can swing quickly on guidance tweaks and macro risk-off episodes.

Technical phase

After a powerful rebound into 2023 and parts of 2024, ZS struggled to hold near prior highs and began to form a broad trading range with failed breakouts near the upper 300s and multiple corrections of 20–30%. The stock currently trades well below its all-time high yet far above 2022 lows, reflecting a mid-cycle consolidation where big rallies and drawdowns coexist within an overall sideways-to-choppy structure.