Radek Strnad
2 min read
Shares of data security company Varonis Systems (NASDAQ:VRNS) fell 6.7% in the afternoon session after a UBS downgrade of ServiceNow (NOW) sent shockwaves through the sector, exacerbating a sell-off that began the previous day.
Investors were increasingly rattled by the “seat compression” narrative, where AI-driven automation reduces the number of human users required for traditional enterprise software, directly threatening the per-seat revenue models of giants like Salesforce and Adobe. This sentiment was fueled by the rapid rise of AI-native competitors and “vibe coding” startups that can replicate complex features at a fraction of the legacy cost.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Varonis Systems? Access our full analysis report here, it’s free.
Varonis Systems’s shares are quite volatile and have had 16 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 1 day ago when the stock dropped 6.5% on the news that Anthropic launched Managed Agents, autonomous AI systems that execute complex tasks.
Traders were worried these would disrupt the traditional SaaS (Software as a Service) model, software delivered via subscription, by replacing human-operated tools with more efficient AI workers. The sell-off intensified after short seller Michael Burry (in a deleted social media post) claimed Anthropic was “eating Palantir’s lunch.” Burry’s comments highlighted the vulnerability of legacy platforms to Anthropic’s cheaper AI solutions.
Varonis Systems is down 37.2% since the beginning of the year, and at $20.12 per share, it is trading 68.2% below its 52-week high of $63.31 from October 2025. Investors who bought $1,000 worth of Varonis Systems’s shares 5 years ago would now be looking at only $373.27.
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