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As digital transformation accelerates, cyber threats remain a persistent challenge. CrowdStrike (CRWD) is using artificial intelligence (AI) to deliver cloud-native endpoint security solutions to solidify its position in the cybersecurity industry. After an impressive 147.2% surge in 2023, CrowdStrike encountered a turbulent 2024, marked by several key events that influenced its performance and market sentiment.
In July 2024, the company faced a major setback when a software update caused widespread system failures for its customers. This incident not only disrupted services but also tarnished CrowdStrike’s reputation, leading the company to offer subscription renewal discounts to affected clients.
Consequently, the stock plummeted over 11% on July 19 as investors grew concerned about the company’s operational stability. However, it showed resilience, rebounding with a 38.6% gain in 2024, trailing behind peer Fortinet’s (FTNT) 63.5% increase. Valued at $102.7 billion, CRWD stock is up 21.5% so far this year, compared to the S&P 500 Index’s ($SPX) gain of 3.5%. Let’s find out whether CrowdStrike can fully regain its momentum and if it is a good buy now.
The Trouble in 2024
On July 19, CrowdStrike issued a flawed update to its Falcon Sensor security software, causing approximately 8.5 million Microsoft Windows systems to crash globally. This widespread failure severely impacted industries such as aviation, banking, healthcare, and media. The fallout from the outage led to legal challenges for CrowdStrike. Delta Air Lines (DAL) filed a lawsuit against the company seeking compensation for significant financial losses resulting from canceled flights and operational disruptions. Delta claimed that CrowdStrike’s inadequate software testing and deployment were responsible for the incident.
Despite the severity of the outage, CrowdStrike showed resilience. In the third quarter of its fiscal 2025, the company reported a 29% revenue increase to $1.01 billion, while adjusted earnings per share rose 13.4% to $0.93. Both revenue and earnings exceeded Wall Street’s expectations. Furthermore, CrowdStrike reached two significant milestones during the quarter. Its average recurring revenue (ARR) exceeded $4 billion while maintaining an impressive 97% customer retention rate. Notably, the company also surpassed $1 billion in quarterly revenue for the first time in its history. Management reaffirmed that CrowdStrike remains on course to achieve its $10 billion ARR target by the end of fiscal year 2031. The company also generated $231 million in free cash flow. By the end of Q3, its total cash, cash equivalents, and short-term investments stood at $4.26 billion.
What Is CrowdStrike Doing to Restore Confidence?
CrowdStrike has taken steps to address the challenges it faced in 2024. The company has strengthened its quality assurance processes to prevent future software failures. It has also enhanced customer support and communication efforts to rebuild client trust. These initiatives are essential for restoring CrowdStrike’s reputation and reassuring customers about the reliability of its services. The strong third-quarter results and management’s full-year outlook indicate that these efforts are resonating, as renewal rates remain solid. The company has also reinforced its commitment to service reliability and customer satisfaction by implementing measures to prevent similar incidents in the future.
With the global cybersecurity market projected to reach $298.5 billion by 2028, CrowdStrike is scaling its cybersecurity solutions to capitalize on rising demand. However, management acknowledged during the Q3 earnings call that near-term challenges stemming from the 2024 incident may persist. We will know more when the company releases its fourth quarter and full-year results.
For fiscal 2025, management expects revenue to grow 28%, while adjusted earnings are forecast to rise 21% year-over-year, aligning with analyst expectations. Looking ahead, analysts anticipate earnings growth of 16.7% in fiscal 2026, with revenue projected to increase by 21.4%. Currently, CRWD stock trades at a premium valuation of 95 times forward 2026 earnings and 21 times forward sales.
What Does Wall Street Say About CRWD Stock?
Despite the challenges CrowdStrike faced last year, analysts remain largely optimistic about the company’s prospects. Wall Street maintains a “Strong Buy” rating on CRWD stock. Among the 44 analysts covering the stock, 32 rate it as a “Strong Buy,” three as a “Moderate Buy,” eight as a “Hold,” and one as a “Strong Sell.”
The stock has demonstrated resilience, recently reaching an all-time high of $419.39. This recovery has been supported by positive catalysts, such as CrowdStrike’s Falcon cybersecurity platform earning a perfect score in the 2024 SE Labs Enterprise Advanced Security (EDR) ransomware test. CRWD has also surpassed analysts’ average price target of $386.68. However, the highest target price on Wall Street stands at $450, suggesting the stock could still gain another 7.6% from current levels.
The Key Takeaway
CrowdStrike’s stock saw considerable fluctuations throughout 2024, with the outage serving as a key factor behind investor concerns. However, the company’s swift response and consistent revenue growth, fueled by strong demand for cybersecurity services, helped the stock regain stability toward the year’s end. The challenges in 2024 have created a potential opportunity for the company to rebuild trust and showcase its resilience. Analysts and investors are closely monitoring how the company manages its recovery and capitalizes on the growing need for advanced cybersecurity solutions in 2025.
