On June 2, Zscaler fell 5.8% in pre-market trading, trading at $148.0/share, with trading volume of $4.4178 million. The stock gave back gains from the prior session, when it had surged over 10% following Guggenheim's upgrade to buy with a $214 price target.

The pullback was primarily driven by broad weakness across the systems software sector, with Microsoft down 2.37%, Oracle down 5.06%, ServiceNow down 4.64%, and Palo Alto Networks down 2.29%. Sector headwinds compounded unresolved fundamental concerns stemming from the company's Q4 revenue guidance of $875-$878 million, which fell short of the $879 million consensus estimate. Additionally, the departure of two senior sales executives and a significant downward revision to full-year free cash flow outlook continue to weigh on sentiment. Morgan Stanley noted the stock remains in a penalty box until new growth catalysts emerge and sales leadership vacancies are filled.

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