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Why Zscaler Stock Rose 10% in August

By Demitri Kalogeropoulos – Updated Sep 7, 2020 at 11:35AM

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Investors are betting that growth will continue spiking as more businesses move to remote working arrangements.

What happened

Shares of Zscaler (ZS -2.38%) outpaced a booming market in August. The stock rose 10%, compared with the S&P 500's 7% increase, according to data provided by S&P Global Market Intelligence.

That boost added to an impressive rally for owners of the digital security giant, whose stock is up by nearly 200% so far in 2020.

A man works behind a computer screen.

Image source: Getty Images.

So what

Investors have pushed Zscaler stock higher along with most peers in the enterprise software niche, hoping that pandemic-related changes to business processes will bring sustainably stronger growth to its business. The company cited an "immediate need" for security platforms in late May as it posted a 40% spike in sales and a 55% increase in bookings.

Now what

That May report only covered the selling period that ended in late April, and so investors will be watching its fiscal Q4 announcement, slated for Wednesday, Sept. 9, for confirmation of those positive growth trends. Most investors who follow the tech stock are projecting sales gains of around 40%, but the stock price may react more sharply to the new outlook that CEO Jay Chaudhry and his team issue for fiscal 2021.

Demitri Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Zscaler. The Motley Fool has a disclosure policy.

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