We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
CrowdStrike Stock Plunges 13% in a Month: Time to Hold or Exit?
Read MoreHide Full Article
Key Takeaways
CRWD's P/S ratio of 21.38X far exceeds peers like CYBR, FTNT, and ZS, raising valuation concerns.
Revenue growth slowed from 35% in FY24 to 29% in FY25 and is projected to drop to 21% by FY27.
Q1 FY26 non-GAAP EPS fell 7.6% Y/Y due to rising R&D and sales & marketing expenses.
CrowdStrike Holdings (CRWD - Free Report) stock has been in a downward trajectory over the past month. Shares of the company have plunged 12.6% over the past month, underperforming the Zacks Security industry’s decline of 11.7%.
CrowdStrike has also underperformed industry peers, including CyberArk Software (CYBR - Free Report) , Fortinet (FTNT - Free Report) and Zscaler (ZS - Free Report) . Shares of CyberArk have inched up 0.9%, while Fortinet and Zscaler have declined 9.5% and 10.5%, respectively.
One-Month Price Return Performance
Image Source: Zacks Investment Research
This underperformance raises the question: Should investors cut their losses and exit, or is it worth holding CRWD stock?
CrowdStrike’s Premium Valuation: A Key Concern
CRWD’s lofty valuation make it vulnerable to further correction.
CrowdStrike is currently trading at a high price-to-sales (P/S) multiple, far above the Zacks Security industry. CrowdStrike’s forward 12-month P/S ratio sits at 21.38X, significantly higher than the Zacks Security industry’s forward 12-month P/S ratio of 12.56X.
Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
The stock’s premium valuation when compared with its industry peers, including CyberArk, Fortinet and Zscaler, warrants further caution. At present, CyberArk, Fortinet and Zscaler have P/S multiples of 13.75X, 18.10X and 13.74X, respectively.
CrowdStrike stock has also remained highly volatile due to several macroeconomic and business-related factors. Additionally, the company’s slowing sales growth and profitability compression do not justify its lofty valuations.
CrowdStrike Encountering Slowing Sales Growth
Although CrowdStrike has experienced impressive growth since its IPO, recent quarterly reports have shown a deceleration in its growth rate. The company's revenue growth, while still robust, is not as explosive as in previous years.
CrowdStrike had enjoyed more than 35% year-over-year top-line growth till fiscal 2024. However, the growth rate decelerated in fiscal 2025 to 29%. The current Zacks Consensus Estimate for fiscal 2026 and 2027 suggests that the top-line growth will further decelerate to around 21%.
Rising Costs Hurt CrowdStrike’s Profitability
To survive in the highly competitive cybersecurity market, each player is continuously investing to broaden their capabilities. Investment in research & development (R&D) is a top priority for CrowdStrike. Over the last six fiscals, CrowdStrike’s R&D expenses increased 12-fold to improve the design, architecture, operation and quality of its cloud platform.
Over the past few years, CrowdStrike has invested heavily to enhance its sales and marketing (S&M) capabilities, particularly by increasing the sales force. As a result, CrowdStrike’s S&M expenses increased nearly ninefold to $1.52 billion in fiscal 2025 from $173 million in fiscal 2019.
In the first quarter of fiscal 2026, S&M and R&D expenses soared 25.5% and 34.7%, respectively, year over year. Though the firm foresees these investments to generate benefits over the long run, higher expenses are weighing on the company’s bottom-line results.
First-quarter non-GAAP earnings declined 7.6% year over year to 73 cents per share. Increasing costs are likely to continue impacting CrowdStrike’s bottom-line performance in the near term, as reflected in the Zacks Consensus Estimate.
Image Source: Zacks Investment Research
Conclusion: Time to Sell CrowdStrike Stock
CrowdStrike’s decelerating sales growth, shrinking profits and premium valuation warrant a cautious approach to the stock, which makes this Zacks Rank #4 (Sell) stock less attractive in the near term.
Image: Shutterstock
CrowdStrike Stock Plunges 13% in a Month: Time to Hold or Exit?
Key Takeaways
CrowdStrike Holdings (CRWD - Free Report) stock has been in a downward trajectory over the past month. Shares of the company have plunged 12.6% over the past month, underperforming the Zacks Security industry’s decline of 11.7%.
CrowdStrike has also underperformed industry peers, including CyberArk Software (CYBR - Free Report) , Fortinet (FTNT - Free Report) and Zscaler (ZS - Free Report) . Shares of CyberArk have inched up 0.9%, while Fortinet and Zscaler have declined 9.5% and 10.5%, respectively.
One-Month Price Return Performance
Image Source: Zacks Investment Research
This underperformance raises the question: Should investors cut their losses and exit, or is it worth holding CRWD stock?
CrowdStrike’s Premium Valuation: A Key Concern
CRWD’s lofty valuation make it vulnerable to further correction.
CrowdStrike is currently trading at a high price-to-sales (P/S) multiple, far above the Zacks Security industry. CrowdStrike’s forward 12-month P/S ratio sits at 21.38X, significantly higher than the Zacks Security industry’s forward 12-month P/S ratio of 12.56X.
Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
The stock’s premium valuation when compared with its industry peers, including CyberArk, Fortinet and Zscaler, warrants further caution. At present, CyberArk, Fortinet and Zscaler have P/S multiples of 13.75X, 18.10X and 13.74X, respectively.
CrowdStrike stock has also remained highly volatile due to several macroeconomic and business-related factors. Additionally, the company’s slowing sales growth and profitability compression do not justify its lofty valuations.
CrowdStrike Encountering Slowing Sales Growth
Although CrowdStrike has experienced impressive growth since its IPO, recent quarterly reports have shown a deceleration in its growth rate. The company's revenue growth, while still robust, is not as explosive as in previous years.
CrowdStrike had enjoyed more than 35% year-over-year top-line growth till fiscal 2024. However, the growth rate decelerated in fiscal 2025 to 29%. The current Zacks Consensus Estimate for fiscal 2026 and 2027 suggests that the top-line growth will further decelerate to around 21%.
Rising Costs Hurt CrowdStrike’s Profitability
To survive in the highly competitive cybersecurity market, each player is continuously investing to broaden their capabilities. Investment in research & development (R&D) is a top priority for CrowdStrike. Over the last six fiscals, CrowdStrike’s R&D expenses increased 12-fold to improve the design, architecture, operation and quality of its cloud platform.
Over the past few years, CrowdStrike has invested heavily to enhance its sales and marketing (S&M) capabilities, particularly by increasing the sales force. As a result, CrowdStrike’s S&M expenses increased nearly ninefold to $1.52 billion in fiscal 2025 from $173 million in fiscal 2019.
In the first quarter of fiscal 2026, S&M and R&D expenses soared 25.5% and 34.7%, respectively, year over year. Though the firm foresees these investments to generate benefits over the long run, higher expenses are weighing on the company’s bottom-line results.
First-quarter non-GAAP earnings declined 7.6% year over year to 73 cents per share. Increasing costs are likely to continue impacting CrowdStrike’s bottom-line performance in the near term, as reflected in the Zacks Consensus Estimate.
Image Source: Zacks Investment Research
Conclusion: Time to Sell CrowdStrike Stock
CrowdStrike’s decelerating sales growth, shrinking profits and premium valuation warrant a cautious approach to the stock, which makes this Zacks Rank #4 (Sell) stock less attractive in the near term.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.