CrowdStrike stock rebounded after global IT outage, strong Q3 results, but faces competition

From Nasdaq: 2024-12-10 08:14:00

CrowdStrike Holdings, Inc. (CRWD) experienced a volatile year, hitting a 52-week high in July before dropping to a low in August due to a global IT outage affecting Microsoft Windows devices. However, the stock has rebounded, up 59% since August 5 and 38.5% YTD, outperforming the sector and S&P 500.

Despite challenges, CrowdStrike showed resilience in Q3 with revenues up 29% to $1.01 billion, surpassing estimates. Non-GAAP earnings rose to 93 cents per share, beating expectations. Annual recurring revenues reached $4.02 billion, growing 27% YoY, showcasing strong demand for cybersecurity solutions post-IT outage.

CrowdStrike’s innovation post-IT incident, with updates to its Falcon platform, has strengthened visibility and security, driving growth across its diverse range of modules. Cloud security, identity protection, and LogScale SIEM businesses exceeded $1 billion in ARR, growing 85% YoY, positioning CrowdStrike as a reliable cybersecurity partner.

The company’s market leadership remains strong with significant deals secured in Q3, supported by Falcon Flex subscription model driving customer retention. However, challenges like extended sales cycles post-IT outage and competition from peers like Palo Alto Networks and Fortinet could impact growth rates in the near term.

CrowdStrike’s premium valuation with a high forward P/E of 82.78X and P/S ratio of 18.85 raises concerns compared to industry averages. Competitors offer more attractive valuations, posing a potential risk for CrowdStrike. Despite this, holding the stock for now seems prudent, given its long-term potential in the cybersecurity industry.

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Read more at Nasdaq: Will CrowdStrike Stock Continue Its Uptrend After 39% YTD Surge?