Should you buy CrowdStrike stock after a ‘beat and raise’?

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Updated on Sep 25, 2024

Reading time 2 minutes

CrowdStrike reports market-beating Q2 results and raises future guidance.
Joule Financial's Quint Tatro explains why he's bearish on CrowdStrike stock.
Shares of the cybersecurity company are down 25% versus the start of the year.

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CrowdStrike Holdings Inc (NASDAQ: CRWD) reported market-beating results for its fiscal second quarter and raised guidance for the future on Tuesday. Shares are still in the red after the bell.

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Is CrowdStrike stock a ‘buy’ here?

Despite a strong report and the fact that “CRWD” is now down about 20% from its year-to-date high, Quint Tatro (Founder of Joule Financial) warns the CrowdStrike stock is still too expensive to own. On CNBC’s “The Exchange”, he said:

I can’t get behind it because the fundamentals aren’t there. Especially in this environment, we have to stay true to the fundamentals and try to not chase growth. 28 times sales in this environment, it’s dangerous.

For the full financial year, CrowdStrike now forecasts $1.31 to $1.33 of per-share earnings on up to $2.25 billion in revenue. In comparison, analysts had called for $1.22 and $2.21 billion, respectively. Still, Tatro says:

It’s still trading at about 100 times forward earnings. So, it’s already factoring in, on a multiple basis, a huge growth driver. So, fundamentally, it’s just not a stock I can get behind here.

CrowdStrike Q2 earnings snapshot

Lost $49.3 million versus the year-ago $57.3 million
Per-share loss narrowed to 21 cents from 25 cents
On an adjusted basis, earned 36 cents per share
Revenue jumped 58% YoY to $535.2 million
Consensus was 28 cents EPS on $516 million revenue
Annual recurring revenue (ARR) went up 59%
More than doubled the free cash flow to $73.6 million
Subscription gross margin remained flat at 76%

The Nasdaq-listed company added 1,660 net new subscribers this quarter. It now has 13,080 in total – up 81% year-on-year, as per the earnings press release.