It is equally uncommon for a major company and a Nancy Pelosi-owned stock to experience a 50% drop within a single day, which is exactly what appeared to have happened to Palo Alto (NASDAQ: PANW) on December 16.
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Specifically, despite closing just under $500 on Friday, PANW shares collapsed to $196.92 nearly instantaneously on Monday and are trading at $202.25 at press time in the early morning of December 17.
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Rather than a stock market anomaly, Palo Alto stock’s sudden drop can be attributed to a 2-for-1 stock split, and the technology giant remains 4.57% in the green in the last 30 days, albeit with significant volatility.
Benefits of the Palo Alto stock split
Furthermore, the split positively impacted the shares’ performance, reducing the share price, making it more affordable for retail investors, and attracting smaller investors who might have been priced out previously.
Indeed, some of the general benefits of stock splits include higher liquidity, reducing bid-ask spreads, and making it easier to buy and sell shares.
Companies usually split their stock after significant price appreciation, sending a positive signal that the company believes its stock will continue to perform well in the future.
In addition to its positive – if somewhat underwhelming performance for the technology sector – PANW stock is up 39.83% year-to-date (YTD).
Why Palo Alto stock is on the rise
Palo Alto’s recent performance and continued strength appear obvious, given the company’s importance in the cybersecurity infrastructure and the rise in global cyber threats. Indeed, the company estimated that there were approximately 2.3 million new threats every day when it announced the integration of artificial intelligence (AI) into its systems.
The rise in cyber threats has been equally pointed and concerning in 2024, considering the world’s growing reliance on technology and electronics to run day-to-day operations at the institutional and national levels and the increased risk of theft due to the rise in the stock, and particularly cryptocurrency market.
Recent reports also demonstrate that cybersecurity solutions could soon get a major retail base as the threat from increasingly authoritarian governments is likewise rising.
A December 16 Amnesty International report, for example, revealed that the Serbian authorities have been using Israeli surveillance tools to infiltrate and suppress civil society in the country – a particularly pointed issue given the ongoing mass student protests over corruption in the country and the tragic death of 15 people after the canopy of a recently-renovated train station collapsed.
Analysts revise PANW forecast in wake of stock split
Considering the momentum behind Palo Alto stock and the current global cybersecurity landscape, it is also hardly surprising that recent analyst price target revisions have generally been bullish.
Though the December 16 Morgan Stanley (NYSE: MS) adjustment was made simply to account for the stock split – the forecast was halved from $446 to $223 – it is noteworthy the banking giant reiterated its ‘buy rating.’
Wolfe Research, however, provided an exceptionally bullish revision as it increased its target from $400 to $440. PANW must rally more than 100% to meet this price target.
Here’s how much Nancy Pelosi is up on her PANW stock bet
As for Representative Nancy Pelosi, she appears solidly in the green on her Palo Alto Networks bet.
Despite her original purchase – made on February 12 and potentially worth $1 million – remaining dubious for a long time as PANW shares plunged more than 28% between February 20 and February 21, she is now in the green on this investment.
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After the stock split is considered, Nancy Pelosi might have purchased $1 million worth of shares at about $186, meaning her stake is, given the press time price of $202.25, now worth nearly $1.1 million for a total profit of $87,000.
Her second purchase – worth up to $250,000 and made on February 21 – is even more successful as the buy price stood at about $131, and the stake is, at press time, worth approximately $386,000.
