CRWD Stock: The Right Niche for Our Time

  • Crowdstrike is only halfway to its November high
  • Revenues exceeded estimates in the last quarter
  • Cybersecurity remains a hot niche

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Crowdstrike Holdings (NASDAQ:CRWD) the stock has increased since the start of Russia’s invasion of Ukraine.

The shares opened March 28 at $220.15 each. They were bouncing around $160 before the war started. That gives the company a market capitalization of $51.23 billion on sales of $1.5 billion in 2021. Crowdstrike has yet to report a full year profit.

While tech growth stocks have fallen out of favor, cybersecurity remains a popular niche. Investors are ignoring Crowdstrike’s losses of $42 million, or 18 cents per share in the last quarter alone. Instead, they’re focused on 65% year-over-year revenue growth. They also buy cybersecurity stocks, like Crowdstrike, for national defense.

CRWD Crowdstrike Holdings $222.84

The right niche

Crowdstrike is known for Falcon, a cybersecurity suite that includes client device protection and proactive response services. This means that its software not only fights threats at the network edge, but also collects data to pursue the bad guys.

Crowdstrike management estimates that its products target one-third of the total cybersecurity market, a market that is expected to reach $366.1 billion by 2028. Crowdstrike’s competitors include Palo Alto Networks (NASDAQ:PANW), SentinelOne (NYSE:S) and Fortinet (NASDAQ:FTNT).

Cybersecurity is a rapidly evolving niche, often without notice. A former Crowdstrike competitor was Kaspersky Labs, a Russian company whose software was quickly taken down once the war started. It is also a niche where constant investments are necessary and where workers are very well paid. That’s why Crowdstrike hasn’t seen much net revenue yet.

The cloud is just one of the big changes in the market. Crowdstrike was recently recognized by Forrester analysts for its performance in cloud workload security.

Shields up

The war in Ukraine creates opportunities, as well as costs.

In response to a “shields” advisory issued by the Department of Homeland Security at the start of the war, Crowdstrike began offering free services to critical infrastructure, as well as Cloudy (NYSE:REPORT) and Ping identity (NYSE:ping). The project hopes to build a roadmap for securing public systems.

Cybersecurity’s status as a war zone was bolstered by a recent Canadian report calling China the biggest threat, with hackers directly linked to the country’s military.

Crowdstrike’s growth and niche have made it a favorite at Tipranks, despite continued losses. All but one of the 22 analysts have it on their buy lists. The price target is around $270 per share, up more than 20% from its current level.

I wrote favorably about Crowdstrike in October, when the stock price was 10% above its current level. This illustrates a hazard on all growth stocks, including those of cybersecurity. They are all volatile, often going up and down in investor fashion rather than company fundamentals.

Crowdstrike’s current business fundamentals are solid. They are strong enough to withdraw accounts Microsoft (NASDAQ:MSFT). Analysts consider them strong enough not to worry Alphabet (NASDAQ:GOOGL) competing buyer Beggar (NASDAQ:MNDT).

The basics of CRWD shares

Owning Crowdstrike shares is not for the faint of heart.

Since the company went public in July 2019, shares have risen 245%. But they’ve also suffered sickening falls, losing more than 40% of their value in the latest tech disaster.

Investors should plan their purchases around these drops, snacking on them when others panic. You should also pay attention to the headlines, as the market can spin in circles. So far, the rapid change has only helped Crowdstrike and its shareholders. But that may not always be the case. Knowing why a stock is falling can save your investment.

As of the date of publication, Dana Blankenhorn held long positions in GOOGL and MSFT. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.

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