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CrowdStrike (CRWD) Shares Skyrocket, What You Need To Know


Petr Huřťák /
2024/06/05 12:08 pm EDT

What Happened:

Shares of cybersecurity company CrowdStrike (NASDAQ:CRWD) jumped 12.6% in the pre-market session after the company reported a "beat and raise" quarter. CrowdStrike narrowly exceeded analysts' revenue and annual recurring revenue (ARR) expectations, indicating continued customer investment in its products. Remaining performance obligations (RPO - leading revenue indicator) came in even stronger, accelerating to 42% y/y from 37% last quarter and ahead of analysts' expectations. Looking ahead, CrowdStrike raised its full-year revenue and EPS guidance, which beat Wall Street's projections. The outlook was impressive, given what management considers a "challenging macro environment." Zooming out, this was a great quarter, showing that the company is staying on target.

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What is the market telling us:

CrowdStrike's shares are quite volatile and over the last year have had 14 moves greater than 5%. But moves this big are very rare even for CrowdStrike and that is indicating to us that this news had a significant impact on the market's perception of the business. 

The biggest move we wrote about over the last year was 3 months ago, when the stock gained 25.2% on the news that the company reported fourth-quarter results with revenue and ARR (annual recurring revenue) beating by a slight margin but very convincingly on operating profit. Keeping with that theme, while forward guidance for the next quarter and the full year were only slightly above expectations, non-GAAP EPS guidance was more convincingly ahead, showing better-than-expected profitability. 

Lastly, Palo Alto Networks (NASDAQ:PANW) warned of weakness in security spending when it reported earnings, sending waves of caution across the sector. Cybersecurity peers that reported after Palo Alto put up mixed results, which kept investors on edge for CrowdStrike's results. These results could signal a shift in sentiment given CrowdStrike's popularity within the cyber security space, especially considering its cloud security capabilities.

CrowdStrike is up 35.4% since the beginning of the year, and at $334.17 per share it is trading close to its 52-week high of $351.47 from May 2024. Investors who bought $1,000 worth of CrowdStrike's shares 5 years ago would now be looking at an investment worth $5,762.

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