Stock Story -
What Happened: Shares of cybersecurity company CrowdStrike (NASDAQ:CRWD) jumped 5.8% in the morning session after the company reported second-quarter earnings results. The quarter itself was solid, with ARR (annual recurring revenue), revenue, and operating profit all beating.
With the stock going from nearly $380 in mid-July to $265 now due to the massive outage from a flawed CrowdStrike Falcon update on Windows machines that wreaked havoc on airlines, hospitals, and other important parts of the global economy, the market feared that numbers could look quite bad in the near-term.
Interestingly, the company provided positive updates. These include 1) Multiple large deals (7-, 8-, and even a 9-figure deal) closed after the incident; 2) Gross retention rates over the trailing 5 weeks rose year on year; and 3) The CNAPP (Cloud-Native Application Protection Platform), SIEM (Security information and event management), and identity modules collectively surpassed $1B ARR.
Moving on, guidance was underwhelming, though, as full-year revenue was lowered and revenue guidance for next quarter missed Wall Street's estimates. However, this seems 'better than feared.
These results prove that while there are headwinds from the outage, the headwinds aren't so bad (for the time being).
Is now the time to buy CrowdStrike? Find out by reading the original article on StockStory, it’s free.
What is the market telling us: CrowdStrike’s shares are very volatile and over the last year have had 15 moves greater than 5%. In context of that, today’s move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 30 days ago, when the company dropped 12.5% after CNBC reported that Delta Air Lines (NYSE:DAL) hired famous attorney David Boies to seek damages following the recent cybersecurity incident that caused a global tech outage. The incident was caused by a faulty update developed by CrowdStrike that affected millions of PCs running the Windows operating system, disrupting critical business services. According to the sources, no lawsuit has been filed yet; however, the airline is seeking compensation from Crowdsrike and Microsoft (NASDAQ:MSFT), given the damages caused by the incident.
CrowdStrike is up 12.4% since the beginning of the year, but at $277.38 per share it is still trading 29.3% below its 52-week high of $392.15 from June 2024. Investors who bought $1,000 worth of CrowdStrike’s shares 5 years ago would now be looking at an investment worth $3,309.
