The Rise of CrowdStrike in the Cybersecurity Market The Rise of CrowdStrike in the Cybersecurity Market

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The S&P 500 index hit rock bottom in October 2022 after a tumultuous 10-month decline, eventually leading to a technical bear market. It took over a year for the index to scale back up to achieve a new all-time high, which became a reality in January 2024, signaling the dawn of a promising bull market.

Several top-tier stocks are currently flirting near their peak values, but don’t let that deter you from jumping in. CrowdStrike (NASDAQ: CRWD) stands tall among them. As a prominent provider of AI-powered cybersecurity products, CrowdStrike’s stock has been on an upward trajectory thanks to the company’s stellar financial performance.

The Surge in Cyberattacks Fueled by AI

The use of advanced tools such as generative AI by nefarious elements has led to a surge in cyberattacks, especially phishing emails, which have seen a tenfold increase in the last year alone. This rise is primarily attributed to AI’s ability to create authentic-looking content designed to deceive employees in large organizations.

Employees, being the weakest link in any company’s cybersecurity chain due to their constant interactions with external sources, are highly vulnerable. A staggering 90% of successful cyberattacks have been traced back to endpoints, highlighting the critical need for automated cyber protection. CrowdStrike’s utilization of AI is a game-changer, with its models processing massive amounts of data daily, making millions of attack-intent decisions per second.

Impressive Growth and Profitability of CrowdStrike

In the fiscal year 2024 ending on Jan. 31, CrowdStrike raked in a record-breaking $3 billion in revenue, marking a substantial 36% surge from the previous fiscal period. Projections for fiscal 2025 indicate a further growth of over 30%, potentially hitting close to $4 billion in revenue, as per the upper band of the company’s forecast.

Remarkably, CrowdStrike’s profitability steals the show. The company reported a net income of $89.3 million in fiscal 2024, a remarkable turnaround from the $183.2 million net loss in the previous year. Adjusted for one-time and noncash expenses, CrowdStrike’s non-GAAP net income soared by 104% year over year to $751.7 million, showcasing the robust profitability of its core business operations.

Why CrowdStrike Stock Remains a Viable Investment Option

Despite its stratospheric 400% surge in the last five years and its current perch near an all-time high, CrowdStrike’s long-term financial outlook suggests that there’s still ample room to partake in its growth narrative. The company capped off fiscal 2024 with $3.4 billion in annual recurring revenue (ARR), a key metric that is set to scale up to $10 billion within the next five to seven years.

Even with this ambitious ARR target, CrowdStrike’s potential only scratches the surface of its estimated $225 billion total addressable market projected for fiscal 2028. Moreover, with a market cap of $80 billion, CrowdStrike’s price-to-sales (P/S) ratio of 26.2 based on fiscal 2024 revenue might seem steep compared to industry peers like Palo Alto Networks, but it could prove to be a bargain in the future, given the company’s growth trajectory.

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