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CrowdStrike Stock Up 34% in Three Months: What Should You Do Now?
Zacks
CrowdStrike Holdings, Inc. CRWD has staged an impressive comeback, with shares rallying 34% over the past three months. This surge follows the significant dip in its share price triggered by the global IT outage on July 19, 2024.
CRWD stock has outperformed the Zacks Internet - Software industry and the S&P 500 index’s rise of 16.2% and 10%, respectively, in the past three months. It has also fared better than other cybersecurity players, including Palo Alto Networks PANW, CyberArk Software CYBR and Check Point Software CHKP. Shares of Palo Alto Networks and CyberArk Software have soared 17.1% and 9.1%, respectively, while Check Point Software stock has declined 3.4% during the same time frame.
3-Month Price Return Performance
This outperformance has made investors wonder if this is the right time to buy or hold CRWD stock and wait for more stability. Here’s why maintaining a hold strategy could be the most prudent move.
Resilience in CRWD’s Financial Performance Post Outage
CrowdStrike’s second-quarter fiscal 2025 results underscore the company’s capacity to rebound and sustain investor confidence. Despite the disruption from the July incident, CRWD reported a strong $963.9 million in revenues, representing 31.7% year-over-year growth and surpassing the Zacks Consensus Estimate by $5.3 million.
The company also recorded non-GAAP earnings per share (EPS) of $1.04, up 40.5% from the year-ago quarter and beating the consensus mark by 6 cents. These figures highlight the firm’s resilient business model and operational strength, even in the face of unprecedented challenges.
This robust performance, achieved despite deal delays in the final weeks of the second quarter, reflects the loyalty of CrowdStrike’s customer base and the trust built over the years. The company’s annual recurring revenues (ARR) reached $3.86 billion, up 32% year over year, showcasing consistent demand for its cybersecurity solutions.
CrowdStrike’s Strategic Enhancements and Innovation
CrowdStrike has not rested on its laurels. The company's proactive measures following the July 19 outage included the rollout of new automated recovery techniques and enhancements to the Falcon platform. This effort included bolstering content visibility and control, improved quality assurance and an external review to strengthen platform security. Such strategic moves are essential to restoring and maintaining customer trust, a critical factor in retaining market leadership.
The Falcon platform’s comprehensive range, spanning more than 28 modules that include endpoint protection, identity security and next-gen SIEM, ensures a diversified growth path. CrowdStrike’s cloud security, identity protection and LogScale SIEM businesses collectively surpassed $1 billion in ARR in the second quarter, growing more than 85% year over year. This diversified portfolio positions the company well to withstand industry volatility and adapt to evolving client needs.
CrowdStrike’s Market Position and Customer Loyalty
CrowdStrike’s strategic positioning in the cybersecurity landscape is evidenced by its continuous partnerships and customer endorsements. Even after the incident, significant deals were secured, demonstrating that clients still view CrowdStrike as a trusted partner for security solutions. Notable wins included a nine-figure contract in the cloud security domain and multiple eight-figure deals, underscoring the firm’s strong sales pipeline and growth potential.
Moreover, the company's “Falcon Flex” subscription model, which simplifies module adoption and supports customer expansion, has become a cornerstone for driving higher customer retention. This model allows enterprises to scale their cybersecurity needs without procurement friction, supporting long-term engagement and revenue growth.
Navigating Near-Term Challenges for CrowdStrike
Despite these positives, CrowdStrike is not immune to headwinds. The global IT outage incident has imposed short-term pressures, extending sales cycles and shifting certain deals into upcoming quarters. The company’s guidance reflects caution, with expectations of muted upsell activity and temporarily elevated contract durations impacting net new ARR. Management’s projection that these challenges will subside over a year implies near-term fluctuations but signals a return to growth by fiscal 2026.
Analysts have also turned slightly cautious about its near-term prospects. The Zacks Consensus Estimate for fiscal 2025 and 2026 earnings depicts a downward estimate revision.
Potential legal exposures related to the July 19 incident and the competitive pressures from other cybersecurity players could introduce risks. However, CrowdStrike’s solid financial foundation, evidenced by $4.04 billion in cash and cash equivalents, offers a buffer for navigating such uncertainties.
CrowdStrike’s Lofty Valuation Raises Concern
CrowdStrike’s current valuation raises concerns. The stock trades at high multiples relative to its earnings and revenues. CRWD stock is currently trading at 82.85X forward 12-month earnings compared with 34.95X for the industry. Similarly, it trades at 18.39X forward 12-month sales compared with the industry’s 2.83X. These elevated valuations indicate that a lot of future growth is already priced into the stock, leaving it vulnerable to any negative news or earnings misses.
Conclusion: Hold CRWD Stock for Now
While CrowdStrike’s recent surge is impressive, and the long-term growth outlook remains compelling, holding the stock is a wise choice for now. The company’s second-quarter fiscal 2025 performance, innovative strategies and strong customer relationships underscore its resilience. However, given near-term operational challenges and the potential for extended sales cycles, maintaining a hold position allows investors to benefit from long-term gains while weathering any short-term volatility.
CrowdStrike’s fundamental strengths position it as a cybersecurity leader, making it a stock worth holding as it navigates the remainder of fiscal 2025 and beyond. CRWD stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks Investment Research
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