Should You Buy CrowdStrike After Security Outage?

CrowdStrike (NASDAQ:CRWD) The stock has fallen considerably since its inception cyber security The software caused a global computer outage on July 19. At their lowest point, shares fell almost 40% due to the incident, but they have since recovered and are now only about 15% below their pre-outage price tag.

So should you buy CrowdStrike now that the situation seems to be improving?

CrowdStrike’s software remains in high demand despite its mistake

Before the outage, CrowdStrike was the undisputed leader in cybersecurity. Falcon offers 28 modules on its platform that provide endpoint protection (protecting network access points like laptops) as well as other defenses and capabilities. These products range from cloud security to identity protection, creating an all-encompassing cybersecurity product that’s hard to give up once fully integrated.

In fact, 65% of CrowdStrike’s customer base was using at least five modules as of the second quarter of fiscal 2025. This shows how integrated CrowdStrike products have become with the customer base; That’s probably why the company didn’t see a mass exodus of customers immediately following the outage. Additionally, 48% of its largest customers (those with annual recurring revenue of at least $100,000 or ARR) use eight or more modules.

The outage occurred in the final two weeks of CrowdStrike’s second fiscal quarter (ended July 31), so the full impact on the business remains unclear. In June, management projected total revenue for fiscal 2025 (at the midpoint of the range) at $3.99 billion. Following the outage, management lowered its forecast by just 2.4% to $3.90 billion (again, at the midpoint).

This is a minor change in the grand scheme of things, and management has a history of exceeding expectations and increasing referrals.

Looking ahead, the next earnings report is expected to shed more light on the impact of the event. If the response is still muted, CrowdStrike will have proven its resilience and strengthened its position as an industry leader.

Stocks still expensive

Because CrowdStrike has been a top cybersecurity stock for years, it has a high valuation. In fact, the stock was so expensive that even a 40% drop wasn’t quite enough to make it a bargain; The price-to-sales ratio has never fallen below 15.

Even though the stock no longer trades at nearly 30 times sales, its current valuation is still expensive.

As far as investors can tell at this point, CrowdStrike is still growing quickly, as its ARR rose 32% last quarter. Investors should monitor third-quarter financial results to better understand the long-term effects of the outage on CrowdStrike’s business. But don’t be surprised if it continues to deliver strong results, as the demand for cybersecurity software has never been greater.

The story continues

So can CrowdStrike shares be purchased here? It may be a good option for investors who do not have an existing position in cybersecurity stocks. CrowdStrike is still a top pick in the cybersecurity space, and with huge headwinds blowing in the industry’s favor, can still be a great long term investment.

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Keithen Drury They have positions in CrowdStrike. The Motley Fool has positions in and recommends CrowdStrike. The Motley Fool has a feature disclosure policy.

Should You Buy CrowdStrike After Security Outage? originally published by The Motley Fool