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CRWD investors are wondering if the cybersecurity stock's greatest days are well behind it
With CrowdStrike Holdings, Inc. (CRWD) shares down 31%, investors are wondering if the cybersecurity stock's greatest days are well behind it.
CRWD is down 31% from its November peak as the market exits the cybersecurity industry but business remains strong, which may explain why the stock has risen dramatically from its lows.
However, with the Federal Reserve signalling that it will take an aggressively hawkish stance on inflation, St. Louis Fed president James Bullard says it's "fantasy" to believe anything short of dramatic interest rate hikes that bring economic growth to a halt will work, the prospect of a recession may dampen enthusiasm for CRWD's cybersecurity solutions, as even slow growth may make businesses hesitate to spend money. Is it too late to invest in this stock?
According to the Identity Theft Resource Centre (ITRC), last year was a record year for security breaches, surpassing 2020's record year by 23% and 2022 appears to be on course to surpass that amount.
According to the ITRC, over 400 compromised databases were reported in the first quarter, up 14% from the previous quarter. Worse, according to Eva Velasquez, the organization's president and CEO, the first quarter of the year is normally the lowest for such reported events.
If you're looking for a bright lining, the number of victims has decreased by half from last year, indicating that hackers are targeting fewer individuals but striking them frequently.
Cyberattacks, like death and taxes, have become a part of our daily lives, which bodes well for cybersecurity stocks like CRWD. As a result, while businesses may want to cut down on capital expenditures if the economy worsens, cybersecurity is no longer a luxury. It has become a need.
The issue with highfliers is that they've soared past sensible valuations, making them ripe for demolition. CRWD was one such example, yet it's still expensive by traditional standards.
Shares are valued at 34 times revenue, over 100 times free cash flow, yet the company is still losing money according to generally accepted accounting standards (GAAP). Profits increased roughly 150% to $0.67 per share on an adjusted basis for the year. Analysts are optimistic about the future.
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