Palo Alto Networks (PANW -5.29%) made waves Wednesday when it announced a pricey acquisition, and on Thursday, investors were clearly getting worried about the cost. Analysts, too, started to express concern, with two even downgrading their recommendation on the shares.

With these headwinds blowing in its face, Palo Alto’s stock lost more than 5% of its value during the latter part of the trading day. That was a far steeper decline than the 0.4% slide of the benchmark S&P 500 index.

The $25 billion question

Palo Alto’s asset-to-be is peer cybersecurity company CyberArk Software, for which it agreed to pay roughly $25 billion in a cash-and-stock deal.

CyberArk is a specialist in the niche area of identity security, and Palo Alto said that its ownership of the business will make the segment “a core pillar of the company’s multi-platform strategy.” The buyout has been unanimously approved by the boards of directors of both companies, and is anticipated to close in the second half of Palo Alto’s fiscal 2026.

Palo Alto certainly isn’t a poor company. Nevertheless, $25 billion is a major outlay. Several analysts don’t think that’s worth it, including that frequent downgrader, KeyBanc’s Eric Heath.

Well before market open Thursday, Heath enumerated several major strategic concerns about the deal, according to reports. He cast doubt on the potential synergies of the two businesses, and opined that customers are likely to prefer using a specialized company purely for identity security rather than a broad cybersecurity services provider, among other factors.

Unkind cuts?

Other analysts were similarly bearish, although they didn’t go as far as to downgrade their Palo Alto recommendations. They did reduce their price targets on the shares, however. That clutch of pundits included Mizuho’s Gregg Moskowitz, who cut $15 from his fair value assessment on the stock to $210 per share. He did maintain his outperform (i.e., buy) recommendation, however.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Palo Alto Networks. The Motley Fool has a disclosure policy.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

President Donald Trump’s first 100 days in office occurred between Monday, Jan. 20, and Tuesday, April 29. During this period, the S&P 500 (^GSPC 0.10%) and Nasdaq Composite (^IXIC 0.72%) dropped by 7% and 11%, respectively.

From competing artificial intelligence (AI) platforms out of China, geopolitical tensions in Europe and the Middle East, and (of course) tariffs, there have been many factors putting pressure on the capital markets this year.

Let’s analyze two popular growth stocks that experienced outsized volatility during Trump’s first 100 days in office. More importantly, we’ll uncover why these stocks plummeted and assess where each could be headed going forward.

1. Tesla

I can’t think of another company that’s been more tied to the Trump administration than Tesla (TSLA 4.09%). The chart below illustrates Tesla’s share price action between Nov. 5 (election night) and April 29.

Data by YCharts.

As the trends show, Trump’s election victory served as a brief catalyst for Tesla stock during the final months of 2024. There were two driving forces at play here.

First, Trump installed Tesla CEO Elon Musk to lead the executive order-created Department of Government Efficiency (DOGE) program, looking for waste and fraud in government departments. Second, given Musk’s close ties to Trump, it was reasonable to think he may have had an influence on certain regulatory matters as it relates to companies that Musk controls, including autonomous vehicle regulations — one of the primary catalysts for Tesla’s long-term growth.

Unfortunately, Musk’s actions with regard to DOGE saw severe backlash from the general public in the U.S. and internationally, which led to boycotts and a shunning of most organizations related to Musk. As a result, Tesla stock cratered by 31% during the first 100 days of the new administration. Musk’s divided attention toward DOGE and his association with it didn’t sit well with investors either. Wall Street appears to be concerned about Tesla’s brand reputation as well as the amount of time Musk is spending in Washington (and his other companies) as opposed to focusing on Tesla.

As of market close on May 12, Tesla stock has rebounded by 9% since the conclusion of Trump’s first 100 days (and Musk stepping away from such an active role with DOGE). The partial stock price recovery helped Tesla rejoin the trillion-dollar market cap club. While this might suggest that Tesla is recovering, I’m less sure.

Tesla stock is on the rise recently because the U.S. and China have temporarily eased up on their tariff war, which resulted in a broad bullish move across the stock market. As far as Tesla’s business is concerned, much remains to be seen regarding whether the company can navigate an increasingly competitive landscape in the electric vehicle (EV) industry as well as whether it can recover from the severe brand damage Musk has created.

2. Eli Lilly

During Trump’s first 100 days in office, share prices of pharmaceutical powerhouse Eli Lilly (LLY -4.22%) rose 22%. Admittedly, that’s a gain, but there’s more than meets the eye here.

Data by YCharts.

As the chart above illustrates, shares of Lilly were under a lot of pressure for roughly half of Trump’s first 100 days only to experience a sharp rebound during the final week of April. Even so, shares of Lilly still trade below 52-week highs. I suspect that the stock could be headed for a nasty sell-off for two reasons.

First, pharmaceuticals have (so far) evaded the president’s tariff agenda. But that may soon change, as Trump recently hinted at imposing tariffs on pharmaceuticals sooner than later. On top of that, the President signed an executive order on May 11 to establish “most-favored-nation pricing” on all pharmaceuticals sold in the U.S. The idea here is that Trump wants to bring drug prices in the U.S. on par with other nations where medications are generally more affordable.

I suspect Lilly stock will face some headwinds in the short term until the market can sort out the actual effects these actions will have. In all likelihood, pharmaceutical businesses such as Lilly will fight against such an order (either through lawsuits or lobbying), putting a hold on any permanent changes for now. And these are all executive actions that are open to change by the current executive and by whoever eventually replaces him.

Investors should also remember that Lilly is a diversified operation with medications spanning multiple healthcare sectors, including GLP-1s, Alzheimer’s disease, eczema, and much more. And Lilly is a global business and is not entirely reliant on the U.S.

For these reasons, I think long-term investors should consider buying any dips that Lilly stock may experience in the near term.