CrowdStrike (NASDAQ:CRWD) Faces Post-Earnings Selloff – Buy the Dip or Stay Cautious?
With a 31% Upside to $465, Does CrowdStrike (NASDAQ:CRWD) Offer Strong Growth or Is It Overpriced at 20x Sales? | That's TradingNEWS
Is CrowdStrike (NASDAQ:CRWD) a Strong Buy After the 9% Post-Earnings Drop?
CrowdStrike (NASDAQ:CRWD) reported Q4 FY25 earnings that beat revenue and EPS estimates, yet the stock plunged 9.3% post-earnings, wiping out all gains since December 2024. Investors reacted negatively to weaker-than-expected Q1 and FY26 EPS guidance, despite a record-breaking $6 billion in Total Contract Value (TCV) and continued dominance in the endpoint cybersecurity space. The question now is whether this pullback represents a lucrative buying opportunity or a sign of further downside.
CrowdStrike (NASDAQ:CRWD) Reports Record Growth, Yet Stock Sinks – Why?
CrowdStrike delivered another impressive quarter, with revenue reaching $1.06 billion, reflecting 25.4% YoY growth. The company's subscription business remains a core driver, contributing $1 billion in Q4 revenue while maintaining an 80% gross margin. The highly successful Falcon Flex model continues to gain traction, helping drive 93% sequential growth in contract value, as enterprise customers increasingly adopt multiple security modules. However, despite these strong figures, the market focused on management’s EPS guidance of $3.33–$3.45 for FY26, which fell nearly 25% below consensus expectations of $4.43.
Should Investors Be Concerned About CrowdStrike (NASDAQ:CRWD) Operating Margins?
While revenue growth remains strong, CrowdStrike’s operating margin slightly contracted as the company continues aggressive investment in AI and cybersecurity innovation. The market reacted negatively to this shift, but long-term investors should consider whether the short-term profit compression is justified by CrowdStrike’s expansion into AI-driven security solutions. With cybersecurity threats escalating globally, CrowdStrike's strategic reinvestment into AI and automation positions it for long-term leadership, even if it weighs on near-term earnings.
Valuation Concerns: Is CrowdStrike (NASDAQ:CRWD) Too Expensive?
One of the biggest concerns for investors is valuation. CrowdStrike currently trades at 20x forward sales and over 100x FY26 estimated EPS, making it significantly more expensive than many peers. By comparison, SentinelOne (NYSE:S), a rising competitor, trades at just 6x forward sales. While CrowdStrike remains the leader in endpoint security, the premium valuation leaves little room for error. Investors must decide whether CRWD’s dominance and AI-driven growth justify the high multiple, or if they should wait for a further pullback before entering.
Competition and Industry Risks: Can CrowdStrike (NASDAQ:CRWD) Maintain Its Lead?
SentinelOne (NYSE:S) has emerged as a serious challenger, particularly after CrowdStrike’s July 2024 blackout incident, which raised questions about its reliability. With SentinelOne trading at a much lower valuation and aggressively expanding its market share, CrowdStrike faces increased competition in the endpoint security space. However, CrowdStrike still benefits from its industry-leading AI-powered cybersecurity platform and high customer retention rates, factors that could help it maintain leadership despite growing external pressures.
CrowdStrike (NASDAQ:CRWD) Price Target: Can It Reach $465?
Despite short-term headwinds, analysts maintain a bullish long-term outlook on CRWD stock, with price targets averaging $410–$465. A discounted cash flow (DCF) model suggests a fair value of $465, representing 31% upside from current levels. However, the stock’s sensitivity to rising interest rates and competition could lead to volatility in the near term. If the broader market remains weak, CrowdStrike could dip below $350, offering an even better buying opportunity.
Buy, Hold, or Sell? What’s the Best Move for CrowdStrike (NASDAQ:CRWD)?
CrowdStrike remains a leader in cybersecurity, with $4.8 billion in projected FY26 revenue and AI-powered expansion driving long-term growth. However, the high valuation, rising competition, and margin concerns create near-term uncertainty. Investors should weigh whether the 9% pullback presents a buying opportunity, or if they should wait for a better entry point closer to $350. With a price target of $465, the stock still holds 31% upside, but patience may be rewarded as market volatility plays out. Will CrowdStrike regain momentum, or is the post-earnings drop a warning sign for investors?
