CrowdStrike is a buy even after its lofty gains
How good was the earnings report? Enough to make the stock pop by nearly 15% on the day of, to close the trading session at a price of $161.19
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Mike Sakuraba graduated with double major of English and Economics. Part time writer, part time investor, full time dad. Mike loves writing about technology, sports, and investing.
2020-12-05 08:29

When you hear the name CrowdStrike (NASDAQ:CRWD), it is not exactly clear what the company does or even which field it is in. But after the recent Q3 earnings report that the company had, CrowdStrike is on nearly every growth investor’s radar. CrowdStrike is one of the industry leaders in cyber security and patrols cloud-based software for incoming attacks or malicious threats. You may think, that’s it? That’s all they do? But these companies are the reasons why we feel safe entering our personal information into a website to pay for a product or service. They are on the frontline against identity theft and many other forms of cyberattacks that many websites see thousands of times a day.

How good was the earnings report? Enough to make the stock pop by nearly 15% on the day of, to close the trading session at a price of $161.19, a price level that is up almost 200% since the beginning of the calendar year. Revenue grew at a rate of 86% year-over-year, customer growth topped 85%, and free cash flow rose by an astonishing 986% since the same quarter in 2019. CrowdStrike has arrived, and it has graduated from a developing SaaS company to a dominant force and potential multi-bag growth stock from here on out.

CrowdStrike provides so many different levels of service to its customers that by the time you are immersed into their environment, it becomes costly for companies to switch to another provider. These days, companies are not skimping on security spending either as the increase in eCommerce and cloud-software reliance has driven home the need to not only protect your site, but your customers as well. CrowdStrike’s Threat Graph actually strengthens itself with the more customers it has. Each attack is documented and the Threat Graph learns the attack and sends defense not only to the site being attacked, but all of the other clients that are a part  of the Threat Graph network. You can see why companies are clamoring to be a part of the CrowdStrike ecosystem.

So what is in store for the future? With an increased reliance on employees working from their homes during the COVID-19 pandemic and perhaps after as well, companies will need to beef up their cybersecurity as employees work from vulnerable home networks. In other words, do not expect to see CrowdStrike going anywhere soon. Industry rival Z-Scaler (NASDAQ:ZS) also saw a huge gain on impressive quarterly results, so it is clear the entire industry is benefiting from the increase in internet usage. While Z-Scaler can be seen as a threat to CrowdStrike, it seems as though both companies are doing extremely well in this environment regardless of the rivalry. The earnings for CrowdStrike have changed their image though, as the free-cash flow positive part of their report should give investors a ton of optimism for the future. The current levels may actually be the cheapest we see CrowdStrike ever again.


Disclaimer: I have no positions in any of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. All information should be independently verified and should not be relied upon for purposes of transacting securities or other investments. See terms for more info.

Published On
2020-12-05 08:29

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About the Author
Mike Sakuraba graduated with double major of English and Economics. Part time writer, part time investor, full time dad. Mike loves writing about technology, sports, and investing.

Analyst Ratings
Target Price $208.37
# of Analysts 19
Last updated 2021-01-19


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