The week followingCrowdStrike Holdings (NASDAQ: CRWD)CRWD stock has fallen nearly 6% (5.6%) since the earnings report was released. CrowdStrike beat CrowdStrike on earnings and revenue.
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The stock has risen 320% since its June 2019 debut. Investors have been worried about the stock’s high valuation for a long time. CrowdStrike’s stock is currently falling because of this concern. Although short interest is still low overall, it has increased approximately 15% over the past month. __S.13__
This would also be consistent with volatility in CRWD strikes over the past 12 months. However, every dip in the stock’s price has been followed by a rebound that was stronger than ever before. This is likely to continue.
The Numbers are Favorable
Total Addressable Market (TAM) is one of the key performance indicators for software-as-a-Service (SaaS) companies. CrowdStrike is continuing to surpass this high standard. __S.21__
Grand View Research estimates that the 2020 global cybersecurity market will be worth $167.13 trillion. CrowdStrike posted an $874.45million revenue between February 2020 and January 2021. This is CrowdStrike’s fiscal year. This was more than half of global total revenue. __S.25__
Cybersecurity revenue will grow at 10.9% CAGR between 2021 and 2028. CrowdStrike’s first quarter of 2021 saw $640.49m in revenue, which was 69.8% more than the year before. __S.28__
The Network Effect
Despite the impressive numbers, one has to wonder why. CrowdStrike’s network effect is one reason for a positive outlook. CrowdStrike is a security force multiplier because every customer becomes a source of potentially new threat information, which means CrowdStrike has a new customer each time.
This is how it works. The company’s Security Cloud, which uses machine learning to improve its capabilities, becomes more intelligent and quicker as companies sign up. The threat landscape is better understood and can be acted upon with more data. CrowdStrike claims that this data can prevent attacks even without the need for malware signatures and prior knowledge about malicious files. __S.38__
CrowdStrike also puts companies at a competitive disadvantage, at least in perception. __S.40__
What Threats Exist?
The main threat is the slowing of growth. CrowdStrike does not make a profit on a GAAP basis. Any slowdown in revenue growth will only perpetuate this reality. This has not been the case in 2021, as we have already noted. The cybersecurity industry is becoming more crowded, but that doesn’t mean there aren’t threats. __S.49__
A smaller competitor,SentinelOne (NYSE:S)This hybrid cybersecurity approach combines both cloud-based and on-site services. The company says this approach is more efficient and reliable than CrowdStrike’s cloud-native one, but enterprise companies will continue to defer return-to work plans.
A second threat is fromPalo Alto Networks (NYSE: PANW).As the market leader for on-site firewall appliances, many businesses have invested in this company. It has also expanded its offerings to include cybersecurity services in recent years.
Analysts Are Bullish After Earnings
Based onMarketBeat data on CrowdStrike15After the earnings report, analysts raised the price target on the stock. 14 of them give CRWD stock a target price well over $300. This is important to remember when you consider CrowdStrike’s consensus price target of $291.46 as at the time this article was written.
CrowdStrike has been recently added to Nasdaq 100 Index. It is likely institutional investors will buy the stock, especially if they are mutual funds or exchange-traded funds. It will not only support company valuations but it could also be a boon.
Publited at Thu, 09/09/2021 @ 08:19:04 +0000