Where Will SentinelOne (S) Stock Be in 3 Years?
Key Points
SentinelOne’s stock still trades below its IPO price.
It’s still growing, but it faces intense competitive and macro headwinds.
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SentinelOne (NYSE: S), a provider of AI-powered cybersecurity services, went public five years ago at $35 per share. Its stock reached a record high of $76.30 in late 2021, but it now trades at about $24. Let's see why it pulled back -- and if it will recover over the next three years.
Why did SentinelOne's stock drop below its IPO price?
SentinelOne's Singularity XDR (extended detection and response) platform uses fully automated AI algorithms to counter cybersecurity threats. It claims that the approach is faster, more accurate, and more efficient than relying on teams of human analysts.
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From fiscal 2021 to fiscal 2026 (which ended this January), SentinelOne's revenue surged from $93 million to $1.00 billion. However, its revenue growth, annualized recurring revenue (ARR) growth, and ARR growth among larger customers have all cooled over the past four years.
|
Metric |
FY 2021 |
FY 2022 |
FY 2023 |
FY 2024 |
FY 2025 |
FY 2026 |
|---|---|---|---|---|---|---|
|
Revenue Growth |
100% |
120% |
106% |
47% |
32% |
22% |
|
ARR Growth |
96% |
123% |
88% |
39% |
27% |
22% |
|
Growth in Customers with $100,000+ in ARR |
109% |
137% |
74% |
30% |
25% |
18% |
Data source: SentinelOne.
For fiscal 2027, SentinelOne expects its revenue to rise 20%-21%. That slowdown isn't disastrous, but it indicates its hypergrowth days are over.
That deceleration can be attributed to intense competition from larger cybersecurity companies, including Palo Alto Networks (NASDAQ: PANW) and CrowdStrike (NASDAQ: CRWD), which are integrating more AI-powered tools into their endpoint security platforms, as well as macro headwinds that drove its enterprise customers to rein in spending.
SentinelOne's pursuit of higher-value enterprise customers (which generate over $100,000 in ARR) also exposed it to longer sales cycles with lower upfront payments. At the same time, it reined in its aggressive, loss-leading customer acquisition strategies to stabilize its margins.
Its dollar-based net revenue retention rate among customers with over $100,000 in ARR also dipped from 115% in fiscal 2024 to 109% in fiscal 2026. In other words, its older, maturing enterprise customers were spending less money year over year on its platform.
Where will SentinelOne's stock be in 3 years?
From fiscal 2026 to fiscal 2029, analysts expect SentinelOne's revenue to grow at an 18% CAGR. But with an enterprise value of $8.3 billion, it isn't a screaming bargain at 6.9 times this year's sales. It also isn't expected to turn profitable within the next three years.
If SentinelOne matches analysts' estimates through fiscal 2028, grows its revenue at a 15% CAGR through fiscal 2030, and still trades at seven times its current fiscal year's sales, its market cap could grow nearly 86% to $15.4 billion within the next three calendar years. That would lift it back above its IPO price, but it would remain far below its all-time high.
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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike. The Motley Fool recommends Palo Alto Networks. The Motley Fool has a disclosure policy.
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