CrowdStrike Stock Forecast

CrowdStrike Stock Forecast: Practically the entire world is online. People on opposite sides of the globe have the ability to connect and do business.

Unfortunately, these new connections also introduce the possibility for viruses, malware, and other cyberattacks.

For your average person, installing security software helps prevent most issues, but the situation is different for investors.

The need for cybersecurity is an investment opportunity. Buying stock in companies that offer security solutions and other cyber protection products can be a gamble that pays off.

While any investment carries risk, doing your research into the particulars of a company instead of whether there is a market for the products or services they sell can help you make an informed decision.

CrowdStrike = Cybersecurity + Cloud Computing

CrowdStrike (CRWD) is a cybersecurity company that focuses on the needs of cloud computing. It calls this subset of technology industry “Security Cloud.”

CrowdStrike opened its doors in 2011 to address what was, at the time, a largely untargeted subset of computer security.

The company employs a non-conventional approach to managing cyber threats by looking at the network effects of crowdsourced data as it relates to cloud computing as well as graph databases.

CrowdStrike’s Falcon platform uses that information to spot threats and prevent data security breaches.

Cloud-native and AI-powered, the platform delivers everything next-gen cyber protection in a single all-in-one solution.

CrowdStrike is also available as part of a robust and diverse partnership program. CrowdStrike’s platform allows for collaboration, crowdsourcing, integration, and easily scaled solutions.

The company uses a subscription-based model with modular cloud options, so it is easy for end users to customize their cyber protection. Efficacy is high, the number of false positives is low, and implementation is easy.

Is CrowdStrike Stock a Buy?

There is certainly a market for CrowdStrike’s products. As technology is getting more complex, hackers are developing more eloquent ways to access company data and disrupt operations.

Even crime organizations are getting involved and companies as well as countries, governments, healthcare, financial services, and other seemingly impenetrable institutions are vulnerable.

These issues will only grow over time. In 2017, there were 18 billion connected devices in the world. By 2022, that number is going to be nearly 29 billion according to Cisco.

These devices and the companies that connect them need protection. The losses incurred from a single cyberattack (2017’s WannaCry) was somewhere between $4 billion and $8 billion.

How much could another attack cost when there are close to 30 billion devices online?

CrowdStrike is one of the most popular solutions out there, and the cybersecurity industry seems to like CrowdStrike’s products. It has more than 5,400 active subscriptions, including roughly half of the companies in the Fortune 100 and 40 of the top 100 companies in the world.

CrowdStrike also handles cybersecurity for 11 of the 20 biggest banks. Forrester said the company is a Leader in cybersecurity detection and response while Gartner scored the company as one of the best endpoint protection platforms – but that’s only half the battle. The company also needs to operate well to be a good investment.

Right now, CrowdStrike is focused on growing its customer base. It more than doubled its number of subscriptions from the end of fiscal 2018 to the end of fiscal 2019 – a 116% increase.

It is doing this through customer acquisition programs (e.g., free trials) and partnerships. The company is also leaning on existing customers, cross-selling additional modules.

This land-and-expand strategy has helped CrowdStrike achieve a 124% net retention rate.

Finally, the company is looking to enter new markets that leverage the data its products have collected and reach new customer segments.

Risks of Investing in CrowdStrike

CrowdStrike has experienced massive growth in a short amount of time, and its operations have expanded in kind.

At the end of fiscal 2016, the company had just 324 employees. CrowdStrike had over 2,300 employees at the end of fiscal 2020 Managing that level of growth and doing so well enough to continue ramping up operations is no small feat.

The company has to attract the right people, grow its management systems, evolve the way its employees communicate, and reinforce its products to support higher volumes – and find a way to profitable.

So far, that hasn’t been happening. CrowdStrike posted net losses of $141.8 million, $140.1 million, and $135.5 million at the ends of FY20, FY19, and FY18 – that’s a deficit of $637.5 million.

Many companies experience losses like this, especially early on and especially in tech, but CrowdStrike has a limited operating history. Investors cannot ignore it, if for no other reason than that the company doesn’t have much of a base to make predictions.

Also, the company is spending money to attract and acquire new customers. It will need to make good on those investments or risk incurring additional losses. The combination is not prohibitive, but it is worth mentioning.

Will CrowdStrike Competitors Beat It?

Most of CrowdStrike’s competitors approach cybersecurity differently. Some of them focus on detecting known attacks.

These threats are identified and catalogued so that if someone uses those methods to breach a company’s data, the security product spots it. However, these offerings do not spot new threats.

Other products focus on malware and use machine learning to spot those issues, but more than half of cybersecurity attacks are not malware focused.

There are bolt-on cloud products, but these are notoriously finicky and expensive. Ultimately, CrowdStrike has few direct competitors.

Its Falcon platform was the first cloud-native, multi-tenant security solution that applied machine learning and AI to provide protection for a variety of endpoints, from laptops to servers, virtual machines to IoT connected devices.

CrowdStrike Stock Forecast: The Bottom Line

CrowdStrike is a good call for some investors, but not all. The price of CrowdStrike’s stock moves a lot. These fluctuations are wonderful when investors can day trade and exploit those variations.

Options traders may also appreciate the volatility. For other investors, those elements can be a real negative. High volatility means more risk.

Momentum drives the stock price up and down like a roller coaster. Either strap in and enjoy the ride or stick to the Ferris wheel and carousel.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.