capital · May 20, 2026
Zscaler Stock Drops as Red Canary Acquisition Shows Limited Momentum
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Zscaler shares tumbled 6.8% intraday following a Morgan Stanley downgrade tied to Red Canary integration concerns. The downgrade highlighted the Red Canary acquisition's failure to deliver expected market momentum amid rising SASE competition. Zscaler completed the Red Canary acquisition in fiscal Q2 2026 alongside SPLX for a combined $692 million. Analysts expressed concerns over slow integration of Red Canary which has not provided the anticipated boost to new customer acquisition.
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