Contemplating Purchasing CrowdStrike Prior to November 26? Insights from History Provided Here.
Contemplating Purchasing CrowdStrike Prior to November 26? Insights from History Provided Here.
CrowdStrike (CRWD 0.69%) has had its share of trials this year. A faulty software update released by the cybersecurity giant in July was responsible for the largest IT outage globally, resulting in a 20% drop in the stock value over two trading sessions. However, CrowdStrike promptly rectified the issue within an hour, providing a fix, and subsequently implemented measures to prevent a recurrence.
The company's swift action and determination seem to have maintained the trust of both customers and investors. The stock has climbed by 50% since its August low and is gearing up for a 30% increase this year. The report following the outage indicated that most clients had remained loyal to the company, with new significant contracts also being secured.
While the effects of the outage are not completely behind us, CrowdStrike has announced compensation to affected clients, which is projected to negatively impact earnings in the forthcoming quarter. Insights into this and other aspects will be shared on Nov. 26 as CrowdStrike releases its Q3 fiscal 2025 earnings. Should you acquire CrowdStrike before this significant date? Let's delve into CrowdStrike's history.
The ascent of CrowdStrike
So, let's discuss why CrowdStrike has established itself as a significant player in the market. The widespread disruption caused by the July glitch, impacting operations as diverse as flights and surgeries, demonstrated the worldwide reach of CrowdStrike's cybersecurity infrastructure. CrowdStrike offers customers a single lightweight agent, named Falcon, powered by AI, integrating data from various sources to forecast threats.
Customers can select from among 28 modules to tailor their security system according to their requirements, seamlessly integrating with the Falcon platform. This flexibility makes Falcon an excellent option for businesses of all sizes, ensuring they can scale services according to their requirements.
CrowdStrike's strong earnings performance in recent times can be attributed to the service's success, consistently surpassing analyst estimates in the past four quarters, including the quarter impacted by the outage. In fact, despite the outage occurring in the last two weeks of the reporting period, when deals typically close, CrowdStrike still managed to report a 32% increase in total revenue to over $963 million and a 32% increase in annual recurring revenue (ARR) to $3.86 billion, with over $200 million in new ARR added during the quarter. The company also retained most of its pipeline deals and added new ones, signaling resilience and optimism about its future.
Reading the history books
However, is it advisable to invest in CrowdStrike before its Nov. 26 earnings report? Examining the company's past reveals that its share price has historically increased in the month following its earnings reports. For instance, the stock surged by over 8% in the month following the recent second-quarter report, and by 26% following the first-quarter report. The price also advanced by 6%, 20%, and 12%, respectively, in the subsequent months following the fourth, third, and second quarters of the 2024 fiscal year.
CrowdStrike's post-crisis earnings report was no exception to this trend. That being said, it's crucial to note that the consequences of the crisis are not yet fully accounted for. CrowdStrike has projected that the compensation offered to customers - the customer commitment packages - will result in an estimated $30 million revenue reduction in the third quarter. Investors will closely observe the company's performance in this regard, and any discrepancy could potentially impact the stock's value.
Now, returning to our central question, should you buy CrowdStrike before the Nov. 26 earnings report? If you do so, your short-term gains could be substantial, provided CrowdStrike adheres to its historical trends. However, an even more rewarding strategy would be to focus on the long term. The variations in performance over a few weeks will generally have a minimal impact on your overall returns if you maintain a long-term investment in CrowdStrike stock.
I am drawn to CrowdStrike for its robust earnings profile, demonstrated resilience after a major setback, and promising future prospects, making it an attractive acquisition opportunity today or after Nov. 26.
The company's strong financial performance, including consistently surpassing analyst estimates, has attracted investors, leading to a 50% increase in the stock value since its August low. With a focus on investing, understanding CrowdStrike's financial reports, such as its upcoming Q3 fiscal 2025 earnings on Nov. 26, can provide valuable insights for potential investors.
As we delve into CrowdStrike's history, we observe that the company's share price often tends to increase in the month following its earnings reports. For instance, the stock surged by over 8% in the month following the recent second-quarter report. Hence, considering the long-term perspective, investing in CrowdStrike stock may yield rewarding returns, irrespective of whether the investment is made before or after the Nov. 26 earnings report.