SentinelOne stock on edge ahead of earnings: will it rally or crash?

SentinelOne stock price has rebounded in the past few days, moving from a low of $12.27 on February 23rd to the current $14.

It has jumped in the last ten consecutive days and is now hovering at its highest point in over a month.

So, will the rally continue rising or falling after earnings this week?

SentinelOne to publish its earnings 

SentinelOne, a top company in the cybersecurity industry, has come under pressure in the past few months.

It has dropped by 45% from its highest point in February last year and by 82% from its all-time high.

Most recently, the stock has tumbled as investors remained concerned about the potential disruption by artificial intelligence (AI) tools. 

Still, analysts believe that these fears are overblown as demand for cybersecurity tools will see more demand in the new era of AI.

This growth is key as its business combines data, intelligence, and artificial intelligence.

SentinelOne’s stock has lagged behind the market despite the ongoing revenue growth.

The most recent results showed that its revenue grew by 23% to over $258 million, continuing a trend that has been going on for years.

The company’s annualised recurring revenue (ARR) jumped by 23% to over $1.05 billion, while the number of companies with an ARR of $100,000 and more jumped to 1,572.

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SentinelOne continued to narrow its loss during the quarter. Its net income margin was minus 23%, an improvement from minus 37% in the same period in 2024.

Analysts believe that the upcoming financial results will show that the company continued growing in the fourth quarter.

The average estimate is that its revenue jumped by 20% to $271 million, with the highest estimate being $273 million.

Also, the earnings per share is expected to be a loss of 18 cents, down from the previous 22 cents.

As a result, its annual revenue will cross the key $1 billion milestone, representing a 22% annual growth. It will then make $1.2 billion this year, up by 20% YoY.

There are signs that the company has become a bargain. It trades at 4x forward sales, much lower than CrowdStrike’s 18x and CloudFlare’s 24x.

The company also has a favorable rule-of-40 multiple. This multiple is estimated by adding the company’s revenue growth and its profit margin.

In this case, it has a revenue growth of 20% and a levered free cash flow margin of 25%, giving it a multiple of 45%.

SentinelOne stock price technical analysis

The weekly chart shows that the SentinelOne share price formed a double-top pattern at $29.42, its highest swing in February and December 2024. 

It has moved below the neckline at $14.25, its lowest swing in May 2024.

It has also retested this neckline, completing the break-and-retest pattern, a common bearish continuation sign.

SentinelOne stock remains below all moving averages. Also, the Percentage Price Oscillator has continued falling and is now below the zero line.

Therefore, the stock will likely resume the downward trend after its earnings this week.

If this happens, the next key target will be at $12.6, its lowest point this year. A move below that level will point to more downside, potentially to $10.

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