Is CrowdStrike Holdings (CRWD) a Buy?
Let's see if it's time to buy the dip...
Overview: CrowdStrike is a cloud-based cybersecurity company specializing in next-generation endpoint and cloud workload protection. CrowdStrike’s primary offering is its Falcon platform that offers a proverbial single pane of glass for an enterprise to detect and respond to security threats attacking its IT infrastructure.
Bulls Say
CrowdStrike has strong secular tailwinds given that the endpoint security market is projected to grow rapidly
CrowdStrike has market leadership in endpoint security and has high enterprise penetration within the space.
The company stands to benefit as clients consolidate vendors and opt for a platform-based cybersecurity approach.
Bears Say
Large public cloud vendors often offer their own cybersecurity solutions, which could hamper CrowdStrike’s growth opportunities.
CrowdStrike faces competition from vendors like Palo Alto that have increasingly made investments in the endpoint security space.
There always remains a risk that CrowdStrike may miss out on the next big technology, thereby allowing its competitors to catch up.
Technical Analysis: CRWD’s technical picture is NEUTRAL:
Robert's Conclusion
CrowdStrike Holdings (CRWD) has established a strong foothold in the cybersecurity market, which is experiencing significant growth due to the ever-increasing importance of digital security.
The company is renowned for its cloud-native endpoint security platform, Falcon, which uses advanced technologies like artificial intelligence and machine learning to protect organizations from cyber threats. CrowdStrike's focus on cloud-based solutions puts it at the forefront of the industry's shift away from traditional, on-premises security.
The company's continued innovation and proactive approach to threat detection have positioned it as a trusted partner for organizations of all sizes, from small businesses to Fortune 500 companies.
From a business standpoint, CRWD benefits from a few features of an economic moat:
Network Effects: the firm's cloud-based platform benefits from network effects, as the more customers it acquires, the more data it collects and the better its machine learning models become at threat detection.
Scale and Expertise: As a pioneer in cloud-native cybersecurity, the company's extensive threat intelligence and global presence provide a substantial advantage over smaller rivals.
Switching Costs: Organizations that adopt CRWD's solutions often face switching costs, both in terms of time and resources invested in integrating the platform and training personnel, deterring customers from easily switching to competitors.
CRWD has long been on our radar. In fact, I first pitched the stock back in April 2021. We had since sold the position on April 16th for a +52% gain.
As I'm sure all of you know, things went downhill fast for the company after our sale. A technical issue with their security platform led to a major IT outage that affected multiple industries, including airlines, healthcare, and financial services. Delta Air Lines, one of the most impacted companies, claimed the outage cost them around $500 million due to flight cancellations and delays. This prompted Delta to consider legal action against CrowdStrike for negligence and breach of contract.
This event caused the stock to fall -50% from it's previous all-time high. At present, it is -33% below its highs…