What happened

Palo Alto Networks (NYSE:PANW) shareholders lost ground to a rallying market last month. Their stock dropped 10% in March compared to a 4.2% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.

The slump put shares back into negative territory for 2021, although they have still more than doubled in the past 12 months.

A hacker at work on a laptop.

Image source: Getty Images.

So what

The cybersecurity specialist was caught up in the wider tech stock sell-off in March. But its declines started about a week earlier when investors decided to take profits following a strong fourth-quarter earnings report. Palo Alto Networks announced robust sales growth and an aggressive outlook for the new fiscal year. Yet Wall Street chose to focus instead on the potential for weaker earnings gains in 2021.

Now what

Palo Alto's next operating update won't come until mid-May, when management will have a chance to adjust its outlook that's calling for 19% to 20% sales growth in fiscal 2021. Recent hacking attacks have highlighted digital vulnerabilities for a wide range of companies, and that's generally good news for Palo Alto and peers in the cybersecurity space. Executives are hoping to make the most of that favorable selling environment through acquisitions and an expansion into complementary software niches and selling platforms.

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