Finance
Should You Buy CrowdStrike Stock Before August 28?
CrowdStrike Holdings (NASDAQ: CRWD) The stock was hit hard last month, losing almost 40% of its value in July after it emerged that the cybersecurity specialist’s faulty software update caused a massive outage. While CrowdStrike acted quickly to correct its mistake, the negative press and threats of lawsuits appear to have largely deterred investors from buying the dip.
However, the fast-growing cybersecurity company will release its second-quarter fiscal 2025 earnings report (for the three months ending July 31) on August 28. Will the report be solid enough to bring about a turnaround in his fortunes? In other words, should investors consider buying CrowdStrike stock before August 28 in hopes of better-than-expected results and guidance?
CrowdStrike’s upcoming results could reveal the extent of the damage it faces
The CrowdStrike incident that occurred on July 19 reportedly cost Fortune 500 companies $5.4 billion in losses. Microsoft-based IT systems have failed across the world Delta Airlines reportedly a $500 million hit. Wall Street analysts believe CrowdStrike will likely undertake a lengthy damage control exercise to regain customer trust.
As a result, CrowdStrike may have to offer its solutions at discounts, compensate customers who lost revenue due to the outage, or even offer credits to customers. The details of the true extent of damage CrowdStrike could face should be clear in the earnings report.
It’s worth noting that CrowdStrike previously expected revenue of nearly $960 million (halfway) in the second quarter, or a year-over-year increase of 31%. The company’s full-year revenue guidance is $3.99 billion, up 30% from the previous year. However, analysts have slightly revised down their revenue estimates for the 2025 fiscal year and expect CrowdStrike to fall short of full-year expectations. Their revenue estimates for fiscal years 2026 and 2027 fell even further.
Adding to this uncertainty is that the stock’s valuation isn’t exactly cheap.
Despite the decline, the share remains richly valued
CrowdStrike stock currently trades at 20.5 times sales. That is well above the average for the American technology sector price-sales ratio of 7.8. For a company facing a major incident that could negatively impact its balance sheet and growth for years, timing an investment in CrowdStrike before earnings reporting is too risky a move.
Investors would be wise to stay away from this cybersecurity stock until the true extent of the damage it faces from last month’s events on August 28 becomes clear.
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Hard Chauhan has no position in any of the stocks mentioned. The Motley Fool holds and recommends positions in CrowdStrike and Microsoft. The Motley Fool recommends Delta Air Lines and recommends the following options: long January 2026 $395 calls to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has one disclosure policy.
Should You Buy CrowdStrike Stock Before August 28? was originally published by The Motley Fool
