Call me crazy, but here’s why I’m eyeing up the CrowdStrike share price

20 Jul 2024

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Today has been a tough day for employees at CrowdStrike. The company, known for its cybersecurity technology, is facing blame for global outages affecting airlines, news outlets, and other industries. This could have a major impact on CrowdStrike's stock price. Here are my thoughts on the potential consequences.

CrowdStrike is a company based in the United States that is traded on the Nasdaq. Since the market has not yet opened, the stock is currently down by 20% in pre-market trading. If this trend continues when the market opens, it could result in a loss of $16.7 billion in stock value.

This is a very large number, but some people might say that it makes sense considering the size of the issue that the company could be held accountable for.

Based on current information, Microsoft customers have encountered difficulties that have been connected to a security update conducted by CrowdStrike during the night. The company has acknowledged receiving reports of system crashes associated with their Falcon Sensor system and assures that its engineering teams are actively addressing the problem.

If this problem isn't resolved soon, I predict that the stock price will plummet significantly today. If there are indications that it will take a while to solve, investors may react even more poorly.

Reflecting On Progress

The issue at hand is that something this big should not have been able to occur. CrowdStrike teams should have carefully examined any updates or changes to the software before making them available to such a large number of users. This does not reflect well on the company.

Nevertheless, let's pause for a moment. The stock has increased by 117% in the last year (not including any possible decrease today). It is a popular growth stock, and the most recent quarterly results from June indicate strong progress.

The company's earnings increased by 33% compared to the same quarter last year. They made a net profit of $42.8 million, a significant improvement from the $0.5 million earned the previous year. What stands out to me about this business is that the majority of its customers are on long-term contracts or subscriptions. This ensures that the company can generate consistent annual revenue that recurs year after year. It doesn't have to depend on occasional major sales to sustain its income. Because of this, the company can expand its operations in a more cost-effective way.

Additionally, it's important to remember that cybersecurity plays a crucial role in a significant industry. The need for cybersecurity is expected to grow even more, particularly as artificial intelligence (AI) continues to advance and pose potential risks on the internet.

Despite some people being surprised, I am carefully monitoring the stock in order to potentially purchase it in the coming weeks. The possibility of making a purchase will largely depend on when the current problems are resolved. However, I believe that once they are, this could present a great opportunity for me to invest.

This could be an opportunity for me to purchase a rising cybersecurity company's shares at a lower price for the future.

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