We are sure that we are all aware of the Microsoft outage caused by an update being rolled out for Crowdstrike. However, with the price depleting significantly and an upcoming earnings report in just over a month, investors are intrigued about what Q2 earnings have in store for CrowdStrike. Is it a worthy buy?
Before we dive into whether or not it is a good time for investors to invest in CrowdStrike, let’s take a look at Q1’s previous earnings report as well as how it is expected to be planned out.
What Happened In Q1?
The Q1 earnings report was very impressive, with its share price increasing by 12% and since then, it has consistently improved up until the infamous update. Q1 beat estimates and you can probably assume that the same could occur again. Analysts are likely estimating that this quarter won’t perform as well as last quarter because of the costs of the Falcon update.
In the first quarter, CrowdStrike’s earnings increased by 63%. Revenue, including acquisitions, increased by 33%. Q1 was a great period for Crowdstrike because of its unique cloud platform, which is above the rest.
What Happened To The Share Price After IT Outage
Since the outage, a lot of discussion has surrounded CrowdStrike and its value has decreased significantly. Despite their success after the Q1 earnings and the share price increasing by 28% since the Q1 report, it has decreased significantly with a share value of 293, below the Q1 earnings report.
Those investors who have invested in the stock from Q1 to now have taken a massive hit to their investment; however, investors and experts believe that this actually won’t backfire on CrowdStrike as much as people initially thought.
Thousands of businesses worldwide have been affected by this outage and it has no doubt affected their operations and revenue. However, it will be difficult for these businesses to seek compensation against CrowdStrike. Firstly, due to it being so short, it is difficult for companies to work out how much is lost.
Another factor is that a business won’t be able to prove that their loss of earnings is caused by the outage. This is a major case for countering any compensation claims. Plus, the longevity wasn’t that long to cripple company finances. Not to mention that CrowdStrike is likely covered by insurance.
The airline industry was affected the most by the outage and are still feeling the effects. Even then, passengers cannot claim either because it depends on why they are travelling and where they are travelling. Airlines will likely decline the compensation claims because these were extraordinary circumstances that were out of the airline’s hands.
Should You Buy After The Decrease?
Many people see this as a golden opportunity for investors and with it recording new lows in the last three months, it is certainly worth considering.
There is no argument that CrowdStrike is the leader in its sector. It is Google of the search engine world and Apple of the mobile device world. It is the go-to that most people use because it is a premium service that offers stability. Revenue for this company in the last three years has grown significantly, increasing by 250%, which is a lot in comparison to both Fortinet and Palo Alto Networks, which have grown by 100%.
There is one clear reason why CrowdStrike is levels above the rest and it isn’t just for its firewall protection. CrowdStrikes also offers cloud monitoring and detection services to help prevent any cyber-attacks. Additionally, CrowdStrike continues to monitor those that bypass security to help reduce any damage.
There’s no doubt that CrowdStrike is one of the leading companies in the industry and certainly one of the smartest. The reason they stay above the rest is because they collect information from their customers. This is so they can continuously improve their systems, which allows them to offer the best level of security.
It’s no surprise that CrowdStrike is in the S&P 500 because of its success and investors see this as a perfect opportunity to invest in the stock. Nearly reaching the lows of how it started this year, there is no doubt that CrowdStrike is now undervalued.
Other Stocks To Consider With Cyber Security
As investors, it is important to have a well-diverse portfolio and if CrowdStrike is a stock that is letting you down currently, then you may want to consider other stocks in this sector.
Paolo Alto
Is well known for its great firewalls and is now one of the leaders in cloud security. Its operations have adapted to modern technology, having acquired many successful businesses in previous years to help improve this side of the company.
Since the start of the year, Paolo Alto has increased by 15.84%, which doesn’t seem like a lot but after decreasing by 20% in February, these results are very good. It will be intriguing to see how they perform after this quarter for the Q2 earnings report on August 16th.
Broadcom
The other stock is one that many come across as a bit controversial. Broadcom specialises in the production of semiconductors. However, Broadcom is aiming to diversify their operations and explore other avenues and one of those is cybersecurity.
Broadcom acquired Symantec and only a fifth of their revenue is generated through cybersecurity; however, this is a very different investment. Due to their diversified operations, it allows you to diversify your portfolio even more, as Broadcom covers software development and is a global supplier of semiconductors and cybersecurity. So if one sector is affected by Broadcom, other industries can lessen the blow for them.
To Conclude
Will CrowdStrike bounce back from this slight decrease or is this the beginning of something that can actually decrease a lot more due to the compensation they may have to pay out? The stock market can be difficult to predict so that is down to your due diligence.
CrowdStrikes cloud platform is great for preventing any type of cybercrime, whether that be sensitive data being released or bank fraud. It is arguably the best cyber security stock out there and it is certainly worth the investment.