Netskope (NTSK): Reassessing Valuation After Strong First Post‑IPO Earnings and Upbeat Growth Guidance

Netskope (NTSK) just cleared its first post IPO hurdle with earnings that beat expectations, and the market is now trying to square that growth story with widening losses.

See our latest analysis for Netskope.

Even with that upbeat debut, the 90 day share price return of negative 18.5 percent and year to date share price return of negative 17.7 percent show momentum has cooled lately. This suggests investors are still recalibrating growth potential against heavier reported losses.

If Netskope has you rethinking where the next wave of cybersecurity and cloud growth might come from, this could be a good moment to explore other high growth tech and AI stocks that are starting to attract attention.

With shares still trading well below analyst targets despite brisk revenue growth but mounting losses, the key question now is whether Netskope is quietly undervalued or if the market is already discounting all that future growth.

Price-to-Sales of 11x: Is it justified?

Netskope's recent close at $18.50 implies a rich valuation on traditional metrics, with investors paying a premium for each dollar of current sales.

The price to sales ratio compares the company’s market value to its revenue, a common yardstick for high growth, often unprofitable, software names. For Netskope, that preferred multiple currently sits at 11 times sales, indicating that the market is assigning a high value to each dollar of revenue based on expectations for future expansion relative to reported earnings.

Analysts still expect revenue to climb more than 20 percent annually and see upside of roughly 47.5 percent from here. This helps explain why some investors may be comfortable with a steeper revenue multiple despite ongoing losses and a path to profitability that may remain several years out.

Compared with the broader US software industry, where the average price to sales ratio is about 4.8 times, Netskope appears distinctly expensive. It also trades above a peer average multiple of 8.8 times sales, which highlights how much optimism is already reflected in the shares relative to both the wider sector and closer comparables.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Sales of 11x (OVERVALUED)

However, stretched valuation and persistent losses relative to revenue still leave Netskope vulnerable if growth expectations temper or security spending weakens.

Find out about the key risks to this Netskope narrative.

Another View: Our DCF Flags Even More Downside

While the price to sales of 11 times makes Netskope look expensive against software peers, our DCF model goes further and suggests fair value nearer $6.97, well below the current $18.50. If both growth and cash flow disappoint, how much optimism is truly baked in?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Netskope for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 904 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Netskope Narrative

If our take does not fully align with yours, or you would rather dig into the numbers yourself, you can build a personalised Netskope view in just a few minutes, Do it your way.

A great starting point for your Netskope research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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