Take a fresh look at your lifestyle.

: Cybersecurity stocks are getting battered. Here’s how the Silicon Valley Bank failure is to blame.

Cybersecurity stocks had a bad week after the effects of the Silicon Valley Bank failure showed up in earnings reports — and after a strength that many companies relied on last earnings season shifted to a liability.

Shares of Cloudflare Inc. NET, -23.51% and Tenable Holdings Ltd. TENB, +0.78% both logged their worst week ever, and other companies having a worse week than the ETFMG Prime Cyber Security exchange-traded fund HACK, -1.71% included Zscaler Inc., Okta Inc., CrowdStrike Holdings Inc. and Palo Alto Networks Inc.

On Friday, analysts were discussing how Cloudflare — which went public three and a half years ago and whose stock is now trading at more than triple its IPO pricing — was caught up in a perfect storm of lengthening sales cycles in the broader market brought on by economic uncertainty, and of customers who were acutely sensitive to Silicon Valley Bank’s failure. Analysts noted that Tenable was caught up in the same storm.

Read: Shock wave from bank failures is hitting software stocks now

Silicon Valley Bank failed in the early part of March, three full weeks before the end of the first quarter, which certainly postponed some deal closures, especially at companies with close ties to Silicon Valley and the bank.

Last quarter, Cloudflare forecast better-than-expected results amid a stormy climate for cloud software, but that was before Silicon Valley Bank failed. Analysts said late-stage upsell deals with existing customers were particularly sensitive to lengthening deal times, especially in March.

Upsells to customers already within the ecosystem, however, were cited as a strength by most cybersecurity companies that had a good earnings season. Last quarter, identity-management-software company Okta Inc. OKTA, -2.87%  said the bulk of its business was in upsells and cross-sells to established customers, and the same story was coming out of other cybersecurity companies like CrowdStrike CRWD, -4.82%, Palo Alto Networks PANW, -1.72% and Zscaler ZS, -4.59%. Now that logic looks like it’s being applied to the rest of the industry with the breakdown of winners and losers Friday.

At last check, Zscaler’s stock was down 5%, CrowdStrike’s was down 4%, Okta’s was down 2% and Palo Alto Networks’ was on par with the 1.5% decline in the HACK ETF.

Meanwhile, shares of Cisco Systems Inc. CSCO, +1.26% and ServiceNow Inc. NOW, +0.35% were up 1%.

From late February: Palo Alto Networks stock jumps as ‘budget scrutiny’ for cybersecurity favors large platforms

Shares of Check Point Software Technologies Ltd. CHKP, -0.54%, which reports Monday, were down 1.2% on Friday. Fortinet Inc. FTNT, -0.49% and Qualys Inc. QLYS, -0.70% report earnings next Thursday, Palo Alto Networks reports on May 31, and CrowdStrike, Zscaler and Okta report on June 1.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More