11 Cybersecurity Stocks Underperform Amid Market Turmoil Following Trump’s Tariff Announcement
The cybersecurity sector experienced substantial setbacks in the stock market on Thursday, as major players such as Cloudflare, Fortinet, and SailPoint suffered significant decreases in their stock prices. This sell-off was triggered by U.S. President Donald Trump’s announcement of unexpectedly high tariffs, leading to considerable volatility in the technology sector.
The Nasdaq Composite Index dropped approximately 5.3% as a result of the announcement, which included a blanket 10% tariff on all imports, supplemented by specific tariffs on imports from select countries. The implications were felt across the cybersecurity landscape, with eleven publicly traded firms in this sector performing worse than the Nasdaq, while twelve managed to slightly outperform, despite all recording declines.
Key industry reactions indicated that the levies, which raised tariffs on Chinese imports to 54%, imposed a 20% tariff on goods from the European Union, and instituted a 24% tariff on Japanese imports, were largely unexpected. Analysts noted that the measures suggested broader economic repercussions tied to currency manipulation and other trade regulations.
Peter Tchir, head of macro strategy at Academy Securities, commented on the shock of the tariffs, saying, “The numbers are shockingly high compared to what people were expecting and it is inexplicable in many ways. I think it’s a disaster.” During this unprecedented sell-off, the Dow Jones Industrial Average witnessed its 17th drop of over 1,000 points in its history, dipping 1,576 points by Thursday afternoon.
Cloudflare, Fortinet, and SailPoint Face Major Stock Declines
Among the biggest losers, Cloudflare saw its stock plunge 9.82% to $107.79 per share, marking its lowest point since December 2024. The company’s reliance on international markets is significant, with 49% of its revenue coming from outside the United States. Additionally, nearly half of Cloudflare’s assets are also located abroad, exposing it to increased costs due to the newly imposed tariffs.
Cloudflare noted in a regulatory filing that its supply chains are vulnerable, as it relies on a select group of suppliers for its server infrastructure, which could lead to price increases resulting from tariffs or regulatory adjustments.
Fortinet was the second hardest-hit, with its stock dropping 7.72% to $90.51 per share, the lowest level since November 2024. A significant portion of Fortinet’s workforce is based internationally, with 70% of employees located outside the U.S. Any escalation in tariffs or retaliatory measures could potentially disrupt operations and impede pricing strategies, as revealed in their recent filings.
SailPoint also reported an 8.63% decline in its stock, settling at $17.32 per share. The company has been facing longer sales cycles and increased scrutiny on technology spending due, in part, to economic uncertainties, which could be exacerbated by the recent market turbulence.
In the broader landscape, companies such as Hub Security, Commvault, Rubrik, Rapid7, Zscaler, Radware, OneSpan, and CrowdStrike witnessed similar negative impacts. Conversely, firms like Tenable, Okta, Palo Alto Networks, and CyberArk managed to weather the storm slightly better than the Nasdaq benchmark.
Recent shifts have placed U.S. tariffs at approximately 22%, a significant rise from the previous 2.5% observed in 2024. This marks a return to tariff levels not seen since around 1910. Market analysts point out that these developments highlight the ongoing tensions in international trade and their potential ramifications on the tech sector.
As the dust settles, industry experts continue to monitor these evolving dynamics closely, underscoring the importance of understanding the MITRE ATT&CK framework to identify tactics such as initial access and privilege escalation that adversaries could leverage in this changing economic landscape. Firms must remain vigilant about the impact of trade policy on cybersecurity operations and the broader market.
