Is Palo Alto Networks eyeing a SentinelOne takeover?
SentinelOne shares jump on high trading volume on Wall Street as industry chatter fuels speculation of a potential multi-billion dollar deal.
Israeli cybersecurity company SentinelOne shares rose sharply on Wall Street on Monday amid industry rumors that the company is in advanced negotiations to be acquired by Palo Alto Networks. Palo Alto, founded by Israeli entrepreneur Nir Zuk, is the world’s largest cybersecurity company and is currently valued at around $134 billion.
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SentinelOne’s shares have struggled in recent months, losing about 12% since the start of the year and significantly underperforming both the Nasdaq and S&P 500. The company’s market capitalization stood at less than $6 billion at the start of trading, presenting what some analysts view as an attractive entry point for an interested buyer.
SentinelOne’s stock is currently experiencing unusually high trading volume on Wall Street, almost double its average turnover. If a deal materializes, it is likely to be valued at between $8 billion and $10 billion.
SentinelOne was founded in 2013 by Tomer Weingarten, who has served as CEO since its inception. In 2021, the company went public on Wall Street at a valuation of $9 billion, marking the largest cybersecurity IPO at the time and raising $1.2 billion.
However, since its IPO, the stock has mostly declined, delivering a negative return of 57% for investors. SentinelOne is incorporated in the United States and employs about 2,400 people, most of them outside of Israel.
Palo Alto Networks is known as an aggressive acquirer, but it has not pursued a deal of this scale in some time. Acquiring SentinelOne would strengthen Palo Alto’s position, especially in its head-to-head competition with American rival CrowdStrike for dominance in the endpoint security solutions market.
Talk of a possible deal comes just three months after Palo Alto Networks announced its acquisition of Protect AI, a specialist in securing artificial intelligence systems. Protect AI’s technology addresses new threats such as model manipulation, data poisoning, and prompt injection attacks, risks that are growing as more companies and governments deploy AI tools at scale. Although Protect AI is not an Israeli company, it counts prominent Israeli cyber entrepreneur Shlomo Kramer among its investors and is considered a direct competitor to Israeli startups like Prompt Security, Lasso, and Apex.
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Two months ago, SentinelOne, led by Israeli founder Tomer Weingarten, trimmed its annual revenue forecast, signaling cautious spending by businesses amid ongoing economic uncertainty.
The company revised its full-year revenue forecast to a range of $996 million to $1 billion, down from its previous guidance of $1.01 billion to $1.012 billion. Analysts had expected $1.01 billion, according to data compiled by LSEG.
To support its stock, the Mountain View, California-based firm also announced a $200 million share buyback program.
Looking ahead, SentinelOne projected second-quarter revenue of $242 million, slightly below Wall Street’s estimate of $244.9 million. For the first quarter ended April 30, it reported revenue of $229 million, just ahead of expectations of $228.4 million.
