Fortinet stock (NASDAQ: FTNT) took a beating in the markets, as it tanked 25%, a steep drop that came as a surprise to many, especially considering the company’s numbers weren’t bad.
It brought in $1.63 billion in revenue for the second quarter, up 14% from last year. EPS landed at $0.64, ahead of the $0.59 that analysts were expecting. Billings rose too, hitting $1.78 billion, another solid sign that demand is there.
On the surface, the results looked strong, but investor sentiment didn’t follow. Some point to guidance or broader sector jitters.
Whatever the reason, the reaction shows that even a beat on earnings isn’t always enough when expectations are running high.
But whatever buzz the Q2 numbers created didn’t last long. Investors cooled fast once they saw the company’s guidance for Q3, revenue is expected to land somewhere between $1.67 billion and $1.73 billion, which came in a touch under what some on Wall Street were hoping for.
That cautious outlook, paired with lingering questions about the rollout of Fortinet’s firewall product refresh, raised a few eyebrows.
Fortinet stock: Worst single-day decline
Fortinet stock took a beating on Thursday, tumbling to $71.92, a steep drop that ranks among the company’s worst single-day declines in recent years.
The sell-off was sharp enough to draw legal attention, with a shareholder rights law firm launching an investigation into whether Fortinet may have painted too rosy a picture about its firewall upgrade cycle and revenue projections.
That development has only added to the unease hanging over the stock. Still, not everyone is hitting the panic button.
Some market watchers see the pullback as overdone, pointing to Fortinet’s solid financial footing, leading market position, and growing presence in high-potential areas like Secure Access Service Edge (SASE) and Security Operations (SecOps).
As Forbes noted, the fundamentals remain strong. CEO Ken Xie also struck an optimistic tone, reaffirming confidence in the company’s long-term vision and its AI-powered cybersecurity platform, which he says remains central to Fortinet’s growth strategy.
What analysts say?
Analysts pointed out that the company has only tapped into about 40–50% of a $450 million firewall refresh opportunity so far, and that’s led to fresh concerns about how much more juice Fortinet can squeeze from that line going forward.
That uncertainty didn’t go unnoticed on Wall Street. Several firms moved quickly to downgrade Fortinet’s stock following the earnings call.
Morgan Stanley led the pack, cutting its rating from ‘Overweight’ to ‘Equal-Weight’ and pointing directly to the weaker-than-expected outlook for the firewall refresh.
Other analysts echoed the caution, flagging near-term headwinds in the cybersecurity space and intensifying competition that could make it harder for Fortinet to keep up its growth pace.
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