CrowdStrike stock price staged a strong recovery after crashing hard in August following its massive outage that cost companies millions of dollars. After plunging to $200.9 in August, the stock surged to $388 after publishing better-than-expected financial results. Will the stock continue its strong momentum in 2025?
CrowdStrike revenue growth
CrowdStrike, a popular cybersecurity company, is doing well, helped by the tailwinds of artificial intelligence (AI) and robust cybersecurity needs. Although the company was founded 13 years ago, its revenue growth has remained robust.
CrowdStrike is seeing double-digit revenue growth, and analysts expect the momentum will continue in the next few years.
This momentum happened because of its AI-native cybersecurity platform, and the fact that cyber threats are growing annually. Cybersecurity losses rose to over $12.5 billion in 2023, a 21% increase from a year earlier. Analysts estimate that the cost of cybercrime will get to $639 billion in 2025.
Cyber threats are also expected to get more complicated in the new era of AI and big data. As such, most companies with valuable customer data, are expected to continue boosting their investments in the next few years.
CrowdStrike’s annual results provide more insight into its rapid growth. In January 2020, the company’s annual revenue was over $481 million, which has jumped to $3.7 billion in the TTM.
This growth happened as the company added some of the largest companies as its clients. Target, Mercedes Benz, and Delta Air Lines are examples of firms using its solutions.
These firms use its platform for endpoint security, exposure management, identity protection, and cloud security. Most importantly, CrowdStrike provides a single platform that unifies almost all security needs, as shown below.
Third-quarter revenue growth
The most recent financial results showed that CrowdStrike’s revenue rose by 29% in the third quarter even after the outage. It made $1.01 billion, with $962 million of this coming from subscriptions.
The company has achieved an annual recurring revenue growth of $4.02 billion, while its subscription gross margin grew to 78%.
Analysts are optimistic that the company will continue doing well in the next financial year. The average fourth-quarter revenue by 41 analysts is that its fourth-quarter revenue growth will be 22.40% to $1.03 billion. The final revenue figure will likely be better than these estimates, as it has been in the past.
The next quarter’s revenue is expected to be $1.1 billion, a 20% increase from the same quarter. Also, analysts predict that CrowdStrike’s annual revenue will be $3.93 billion and $4.77 billion in 2024 and 2025.
These numbers explain why CrowdStrike trades at a high valuation of over $87 billion. This valuation gives it a forward non-GAAP P/E ratio of 94.30, much higher than a company like NVIDIA that is seeing faster revenue growth.
However, the rule-of-40 metric shows that CRWD stock is not overvalued. The company’s revenue growth is 29%, and its leveraged free cash flow margin is 32%, giving it a rule-of-40 figure of 61%, comfortably above the 40 level.
Read more: CrowdStrike stock forecast: will it hit its ATH after earnings?
CrowdStrike stock price analysis
The CrowdStrike share price faces a substantial technical risk that could push it lower in 2025. On the weekly chart, the stock has formed a double-top pattern near $400 whose neckline is at $200. This is one of the most bearish patterns in technical analysis.
Therefore, there is a risk that the CRWD share price will suffer a strong reversal in 2025 unless bulls push it above $400. The double-top pattern means that the stock may drop to the neckline at $200.
This view is in line with the broader market forecast we provided on Friday. In it, we estimated that 2025 will be a tough year for the market as bond yields surge.
The post CrowdStrike stock could dive in 2025 despite strong fundamentals appeared first on Invezz
