Editor's note: Any and all references to time frames longer than one trading day are for purposes of market context only, and not recommendations of any holding time frame. Daily rebalancing ETFs are not meant to be held unmonitored for long periods. If you don't have the resources, time or inclination to constantly monitor and manage your positions, leveraged and inverse ETFs are not for you.

Investing in the funds involves a high degree of risk. Unlike traditional ETFs, or even other leveraged and/or inverse ETFs, these leveraged and/or inverse single-stock ETFs track the price of a single stock rather than an index, eliminating the benefits of diversification. Leveraged and inverse ETFs pursue daily leveraged investment objectives, which means they are riskier than alternatives which do not use leverage. They seek daily goals and should not be expected to track the underlying stock’s performance over periods longer than one day. They are not suitable for all investors and should be utilized only by investors who understand leverage risk and who actively manage their investments. The Funds will lose money if the underlying stock’s performance is flat, and it is possible that the Bull Fund will lose money even if the underlying stock’s performance increases, and the Bear Fund will lose money even if the underlying stock’s performance decreases, over a period longer than a single day. Investing in the Funds is not equivalent to investing directly in PANW.

Palo Alto Networks (Ticker: PANW) just dropped its fiscal Q3 earnings, and the numbers delivered. Revenue hit $2.29 billion, up 15% year-over-year and slightly above consensus estimates. Adjusted earnings per share (EPS) came in at $0.80, handily beating analyst expectations of $0.77, and showing growth from $0.66 a year earlier. The company also reported a 34% jump in Next-Gen Security annualized allocated revenue (ARR) to $5.1 billion. So why did the stock trade down after hours?

Despite the strong headline numbers, some investors appeared disappointed by remaining performance obligations (RPO), which came in at $13.5 billion—just shy of the $13.54 billion Wall Street had anticipated. For a name as widely held and momentum-driven as PANW, even a slight underperformance in forward indicators can spark some jitters.

The Setup into Earnings

Heading into the May 20 report, PANW was caught in the crossfire of a broader tech pullback. April’s tariff-fueled market volatility weighed on cybersecurity names with global exposure, even as long-term demand for AI-centric security remained robust. Historically, PANW saw a 2.6% average gain in the two weeks leading into earnings, according to MarketChameleon. But this time, the rally was more muted as traders waited for confirmation that growth was intact.

They got that confirmation—mostly.

The Bigger Picture

CEO Nikesh Arora reaffirmed the company’s push toward platformization: a unified architecture for identity, endpoint, network, and cloud security, powered by AI. The company raised Q4 guidance, forecasting revenue between $2.49 and $2.51 billion and adjusted EPS between $0.87 and $0.89. That’s ahead of the Street, which signals confidence in near-term deal flow despite potential softness in federal spending.

Still, challenges remain. PANW has now posted five straight quarters of slowing new ARR. That’s a red flag for some investors who see it as a signal of maturing growth, particularly in core platform sales. And while large institutional buyers have recently increased stakes, the market wants to see acceleration—not just execution.

Tactical Opportunities in Volatility

With options markets having priced in a potential 7% swing around earnings, short-term traders were bracing for a big move—and they weren’t wrong. Volatility remains elevated as bulls and bears digest the report’s nuances.

For those looking to express directional views, Direxion Daily PANW Bull 2X Shares (Ticker: PALU) and Direxion Daily PANW Bear 1X Shares (Ticker: PALD) offer tactical access to Palo Alto Networks stock. PALU seeks daily investment results, before fees and expenses, of 200% of PANW’s performance. PALD seeks 100% of the inverse.

Whether you believe PANW’s AI-fueled security stack will reignite short-term growth or think platform fatigue could weigh on future results—these tools can help active traders navigate the post-earnings volatility.

Firewall Up—or Time to Log Out?

PANW delivered on Q3. But in this market, execution alone may not be enough. As the cybersecurity sector evolves, so too will the strategies needed to capture—or hedge—its moves.

*Definitions and Index Descriptions

An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. A Fund’s prospectus and summary prospectus contain this and other information about the Direxion Shares. To obtain a Fund’s prospectus and summary prospectus call 866-476-7523 or visit our website at direxion.com. A Fund’s prospectus and summary prospectus should be read carefully before investing.

The Funds have derived all disclosures contained in this document regarding Palo Alto Networks, Inc. from publicly available documents. In connection with the offering of each Fund’s securities, neither the Funds, the Trust, nor the Adviser or any of its respective affiliates has participated in the preparation of such documents. Neither the Funds, the Trust nor the Adviser or any of its respective affiliates makes any representation that such publicly available documents or any other publicly available information regarding Palo Alto Networks, Inc. is accurate or complete. Furthermore, the Funds cannot give any assurance that all events occurring prior to the date hereof (including events that would affect the accuracy or completeness of the publicly available documents described above) that would affect the trading price of Palo Alto Networks, Inc. have been publicly disclosed. Subsequent disclosure of any such events or the disclosure of or failure to disclose material future events concerning Palo Alto Networks, Inc. could affect the value of a Fund’s investments with respect to Palo Alto Networks, Inc. and therefore the value of the Funds.

Direxion Shares Risks – An investment in a Fund involves risk, including the possible loss of principal. Each Fund is non-diversified and includes risks associated with a Fund concentrating its investments in a particular security, industry, sector, or geographic region which can result in increased volatility. A Fund’s investments in derivatives such as futures contracts and swaps may pose risks in addition to, and greater than, those associated with directly investing in securities or other investments, including imperfect correlations with underlying investments or the Fund’s other portfolio holdings, higher price volatility and lack of availability. As a result, the value of an investment in a Fund may change quickly and without warning.

Leverage Risk – The Bull Fund obtains investment exposure in excess of its net assets by utilizing leverage and may lose more money in market conditions that are adverse to its investment objective than a fund that does not utilize leverage. A total loss may occur in a single day. Leverage will also have the effect of magnifying any differences in the Fund’s correlation with PANW and may increase the volatility of the Bull Fund.

Daily Correlation Risk – A number of factors may affect the Bull Fund’s ability to achieve a high degree of correlation with PANW and therefore achieve its daily leveraged investment objective. The Bull Fund’s exposure to PANW is impacted by PANW’s movement. Because of this, it is unlikely that the Bull Fund will be perfectly exposed to PANW at the end of each day. The possibility of the Bull Fund being materially over- or under-exposed to PANW increases on days when PANW is volatile near the close of the trading day.

Daily Inverse Correlation Risk – A number of factors may affect the Bear Fund’s ability to achieve a high degree of inverse correlation with PANW and therefore achieve its daily inverse investment objective. The Bear Fund’s exposure to PANW is impacted by PANW’s movement. Because of this, it is unlikely that the Bear Fund will be perfectly exposed to PANW at the end of each day. The possibility of the Bear Fund being materially over- or under-exposed to PANW increases on days when PANW is volatile near the close of the trading day.

Palo Alto Networks, Inc. Investing Risk – Issuer-specific attributes may cause an investment held by the Fund to be more volatile than the market generally. Palo Alto Networks, Inc. faces risks associated with: development of new products and services may be difficult; may be unable to attract new customers; reliance on channel partners; credit and liquidity risk of customers; sales to government entities may be subject to greater scrutiny; intense competition; among other risks.

Information Technology Sector Risk – The value of stocks of information technology companies and companies that rely heavily on technology is particularly vulnerable to rapid changes in technology product cycles, rapid product obsolescence, government regulation, and competition, both domestically and internationally, including competition from competitors with lower production cost.

Additional risks of each Fund include Effects of Compounding and Market Volatility Risk, Derivatives Risk, Counterparty Risk, Rebalancing Risk, Intra-Day Investment Risk, Concentration Risk, Market Risk, Non-Affiliation Risk, Security Volatility Risk and Cash Transaction Risk. Additionally, for the Direxion Daily PANW Bear 1X Shares, Shorting or Inverse Risk. Please see the summary and full prospectuses for a more complete description of these and other risks of a Fund.

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