The cybersecurity industry is becoming increasingly dangerous, with cyber threats growing in both frequency and sophistication. Recent stats show a 30% surge in global cyber attacks in Q2 2024 compared to last year, with organizations facing an average of 1,636 attacks weekly. This makes it essential to examine the resilience and potential of top cybersecurity companies like CrowdStrike (CRWD).
Don't Miss our Black Friday Offers:
- Unlock your investing potential with TipRanks Premium - Now At 40% OFF!
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
Despite a recent outage that disrupted services for major clients, including airlines, banks, and hospitals, CrowdStrike’s strong market position, high customer retention rates, and innovative security solutions suggest its long-term growth prospects are solid. Analysts remain confident, maintaining Strong Buy ratings, even after the outage.
Given these factors, I am bullish on CrowdStrike stock. The company’s quick recovery from the outage, expanding product portfolio, and strong analyst support indicate it is well-positioned to meet the growing demand for advanced cybersecurity solutions.
Let’s explore why CrowdStrike’s recent outage won’t derail its long-term growth and what makes it a compelling investment in the cybersecurity sector.
The Recent Outage: A Temporary Setback
CrowdStrike has really solidified its position as a leader in the cybersecurity market, especially when it comes to endpoint protection. Its advanced Falcon platform is a big reason for its success.
But on July 19, 2024, CrowdStrike faced a significant challenge when a software update caused widespread disruptions. Tons of Microsoft (MSFT) Windows users were hit with the infamous Blue Screen of Death (BSOD), which led to flight delays, banking service interruptions, and even supermarket problems.
The culprit? A coding error in the Falcon Sensor update caused Windows systems to crash. The damage was massive — an estimated $10 billion in financial losses worldwide. As you can imagine, CrowdStrike’s stock took a nosedive, plunging 11% initially as investors reacted to the news.
However, CrowdStrike’s response was swift and effective. The company quickly identified the issue, isolated the problematic update, and deployed a fix within hours. Within a week, over 97% of the impacted Windows sensors were back online.
Morgan Stanley (MS) analyst Hamza Fodderwala noted that the swift response and limited churn risk suggested minimal long-term reputational damage. Importantly, the issue was a software error, not a security breach, underscoring the integrity of CrowdStrike’s core security capabilities.
While the outage did cause some setbacks, including a projected 20% loss in new bookings for the second half of 2024, the high switching costs for existing customers make it unlikely that they will move to competitors like SentinelOne (S) or Microsoft (MSFT). Plus, CrowdStrike’s swift response and open communication helped minimize any lasting damage.
Now that the dust has settled, it’s clear that the CrowdStrike outage, while significant, was a temporary setback rather than a fundamental flaw in the company’s approach to cybersecurity.
CrowdStrike’s Strong Market Position
CrowdStrike’s market position in the cybersecurity industry is impressive, with a market capitalization of $52 billion. In its latest earnings release for Q1 2025, the company reported a net new annual recurring revenue (ARR) of $212 million, a 22% year-over-year increase. This strong performance highlights effective business strategies and a loyal customer base.
CrowdStrike also achieved total revenue of $921.0 million, a 33% increase from the previous year. This was driven primarily by Subscription revenue, which rose 34% to $872.2 million. These figures underscore CrowdStrike’s ability to attract and retain customers through its subscription model, providing a steady revenue stream.
The stock market reflects this performance. Despite a 44% decline in the stock’s price over the past month, primarily due to the outage, CRWD shares have risen 37% in the past year, outpacing many peers and the broader market.
The stock’s current forward price-to-earnings (P/E) ratio of 56.36x reflects high investor expectations for future growth, especially compared to the sector median forward P/E of 23.82x. The recent price drop has made CrowdStrike pretty attractive, especially for savvy investors.
For example, Cathie Wood has taken advantage of the recent pullback, loading up on CrowdStrike shares. This move by Wood and her team at ARK Invest shows that despite some short-term hiccups, there is still great confidence in CrowdStrike’s long-term prospects.
Expanding Product Portfolio: A Driver of Long-Term Growth
CrowdStrike’s flagship Falcon platform has been the backbone of its product offerings. The company provides 28 cloud modules on the platform to offer comprehensive security solutions that cater to a wide range of customer needs.
One standout addition is the launch of Falcon Complete Next-Gen MDR, which incorporates the Next-Gen SIEM, a fully managed security information and event management (SIEM) solution, to stop breaches with unprecedented speed and precision.
This offering combines the power of CrowdStrike’s Falcon platform with 24/7 management by the company’s security experts. By providing a broad range of integrated solutions, CrowdStrike is positioning itself as a one-stop shop for cybersecurity, potentially increasing market share and customer loyalty.
Strategic partnerships have also been crucial in expanding CrowdStrike’s product portfolio. The company has collaborated with Hewlett Packard Enterprise (HPE) to secure end-to-end AI innovation, focusing on large language models (LLMs) accelerated by Nvidia (NVDA) technology.
The financial impacts of this expanding portfolio are reflected in CrowdStrike’s future outlook. The company expects total revenue for Fiscal Year 2025 to be between $3,976 million and $4,010 million, representing a year-over-year increase of almost 10% from $3,650 million.
Is CrowdStrike Stock a Buy, According to Analysts?
According to the latest analyst ratings, CrowdStrike (CRWD) has a Strong Buy consensus rating. Out of 37 analysts covering the stock, 29 rate it a Buy, seven a Hold, and one a Sell. The average CRWD stock price target of $360.61 implies upside potential of around 66.5% from the current price.
Conclusion
In a world where cyber threats are becoming increasingly dangerous, CrowdStrike looks like the one to bet on. The recent outage was only a temporary setback, not a fatal flaw. The company’s swift response, robust market position, and innovative product portfolio make it a compelling investment in the cybersecurity sector. And with the recent dip? I think it’s more of a buying opportunity than a red flag. I am bullish on CrowdStrike stock, as its long-term growth prospects remain intact.
