For investors who want to hop onto the cloud, there aren’t many businesses that beat CrowdStrike (NASDAQ:CRWD). The company itself continues to outperform quarter after quarter, and so does CRWD stock, which I give a “B” in my Portfolio Grader.
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CrowdStrike is also recognized as a cybersecurity company. As businesses seek protection from malicious hackers — especially in the wake of the Colonial Pipeline hack — CrowdStrike has positioned itself as a first-call company in this niche.
CRWD stock offers exposure to some intriguing tech-enabled market sectors. Plus, the stock is a momentum trader’s dream, as it seems to recover from every dip and consistently frustrate the short sellers.
However, the share price did have some downward bumps in mid-August and early September. Therefore, it’s a good time to assess CrowdStrike’s future prospects and determine whether it makes sense to take a position now.
CRWD Stock at a Glance
The overall trend is decidedly bullish for CRWD stock, as it has ascended from around $130 a year ago to more than twice that price today.
Along the way, there have been slight pullbacks of 5% to 10%. Short-term traders can view these as quick profit opportunities whenever they occur.
For folks with a long-term view, it’s comforting to know that CRWD stock tends to abide by the “trend is your friend” strategy. If the stock is moving up forcefully, why try to fight it?
On the other hand, the share price fell to the low $270s on Sept. 1, after reaching a 52-week high of $289.24 a couple of days prior to that.
What caused the stock to retreat? Let’s sift through the data and see if we can determine the cause of the sell-off.
The results came in for CrowdStrike’s second-quarter fiscal results not long ago. Suffice it to say, those results were outstanding.
Wall Street analysts, according to FactSet, were preparing for CrowdStrike to report earnings of 9 cents per share. The actual result, however, was 11 cents per share, so that was a beat.
There was another beat in terms of quarterly revenues. The analysts were expecting $323.2 million, yet CrowdStrike delivered $337.7 million, representing a 70% year-over-year improvement.
Particularly impressive were Crowdstrike’s quarterly subscription revenues, which increased 71% year-over-year to $315.8 million.
On top of all that, CrowdStrike demonstrated that the company is in a positive cash flow position.
Specifically, CrowdStrike generated $108.5 million in net cash from operations, easily outperforming the to $55 million generated during the prior year’s second quarter.
Why Did CRWD Stock Drop?
To help explain his company’s excellent quarterly performance, CrowdStrike co-founder and CEO George Kurtz cited his company’s well-regarded cloud-focused solution.
“We believe that our extensible Falcon platform, purpose-built to leverage the power of the cloud, collecting data once and reusing it many times, is a fundamental cornerstone to building a durable growth business over the long-term,” Kurtz stated.
There’s so much good news concerning CrowdStrike, it’s hard to even keep up with it all.
For instance, the company recently joined the Nasdaq 100 Index, the Nasdaq 100 Equal Weighted Index and the Nasdaq 100 Technology Index.
It’s difficult to understand why CRWD stock would decline, given the abundance of positive news.
Perhaps it’s because some analysts debated CrowdStrike’s growth in annual recurring revenue, or ARR.
For example, Mizuho Securities analyst Gregg Moskowitz commented, “The magnitude of ARR upside was somewhat more moderate than recent quarters.”
Still, CrowdStrike’s ARR grew 70% in the second quarter. Sure, that’s less than the 74% ARR growth from the previous quarter, but it’s nonetheless quite impressive.
The Takeaway on CRWD Stock
Sometimes, it’s really hard to impress the analysts.
A company can post 70% ARR growth, and it still might not be good enough.
That’s perfectly fine. As long as CrowdStrike continues to make progress in the cybersecurity and cloud niches, it makes perfect sense to hold CRWD stock through each and every price fluctuation.
On the date of publication, Louis Navellier had a long position in CRWD. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
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