What Happened:
Shares of cyber security company SentinelOne (NYSE:S) jumped 6.7% in the afternoon session after the company announced a deal to include its AI-powered endpoint security solutions (like antivirus software) in millions of Lenovo devices. The deal will cover new Lenovo PCs and also include the option for existing Lenovo customers to upgrade to SentinelOne’s security option.
Earlier in the month, Lenovo released new AI-PCs powered by AI-enabled processors and embedded with AI features, including personalized large language models. Being chosen by Lenovo can be considered a big win for SentinelOne as it suggests its cybersecurity offerings dovetail nicely with the evolving technologies in some of the modern computing devices.
Additionally, market trends are favorable: Lenovo anticipates that over 60% of PCs shipped by 2027 will be AI-enabled, presenting potential new revenue streams for companies like SentinelOne that can provide the right security solutions.
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What is the market telling us:
SentinelOne’s shares are very volatile and over the last year have had 23 moves greater than 5%. In context of that, today’s move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 6 months ago, when the stock dropped 16.7% on the news that the company reported fourth-quarter results and provided revenue guidance for the upcoming year, which came in below expectations, suggesting a slowdown in demand amidst an intensely competitive landscape with cybersecurity peers like CrowdStrike. In addition, its net revenue retention rate of 115% missed estimates of 118%. That means its existing customers bought fewer products, and the company is more dependent on new customers (expensive to acquire) to generate growth. Overall, this was a tough quarter for SentinelOne.
SentinelOne is down 4% since the beginning of the year, and at $24.76 per share it is trading 17.5% below its 52-week high of $30 from February 2024. Investors who bought $1,000 worth of SentinelOne’s shares at the IPO in June 2021 would now be looking at an investment worth $584.24.
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