Shock wave from bank failures is hitting software stocks now

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The failures of Silicon Valley Bank and Signature Bank shook the banking sector last month, and now the reverberations are rippling through software stocks.

Tenable Holdings Ltd. TENB shares were headed for their worst day ever Tuesday after the cybersecurity company cut its guidance in an earnings report delivered after markets closed on Monday — and they were taking other security and software stocks down with them. Analysts put the blame on a slowdown in spending by companies in the banking and finance sectors, a core customer...

“The banking crisis in the aftermath [of] Silicon Valley Bank was highlighted as the primary culprit for deal slippage during the final 2 weeks of March,” Needham analysts wrote Tuesday morning. “Several highly qualified, committed deals were pushed out of [the first quarter] as customers extended their approval cycles.”

“The weakness was focused on verticals such as financials, regional banks, technology, and telecom where the company has a greater concentration of large deals,” William Blair analysts wrote, while maintaining an outperform rating on Tenable shares. “Tenable had larger deals face additional scrutiny as CFOs curtailed new spending or delayed deal closure processes.”

 

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