This CRWD Stock Forecast article was written by Miles Grauberd – Financial Analyst at I Know First.

Highlights

• CrowdStrike acquires Israeli Company Adaptive Shield for an Estimated $300 million.
• Adaptive Shield, a CrowdStrike company, has been named the Leader in the 2024 Frost Radar.
• CRWD Stock has Recovered 76.5% Since the Global Outage in July.
• 300 of the Fortune 500 Companies use CrowdStrike.

Overview

CrowdStrike (Nasdaq: CRWD), a global leader in cybersecurity, is revolutionizing modern security with its cutting-edge, cloud-native platform, designed to safeguard critical areas of enterprise risk, including endpoints, cloud workloads, identity, and data.

Powered by the CrowdStrike Security Cloud and advanced AI, the CrowdStrike Falcon® platform combines real-time attack indicators, actionable threat intelligence, adversary tradecraft insights, and enriched telemetry from across the enterprise. This enables highly accurate threat detection, automated protection and remediation, expert threat hunting, and prioritized vulnerability management.

Built exclusively for the cloud with a lightweight, single-agent architecture, the Falcon platform ensures fast, scalable deployment, robust protection, streamlined performance, reduced complexity, and immediate value for organizations.

CrowdStrike: A Comprehensive Solution for Cybersecurity Needs

CrowdStrike has established itself as a one-stop shop for cybersecurity, offering a unified platform that addresses a wide array of security challenges. Its key capabilities include:

• Endpoint Security: Protecting devices on a network from cyber threats.
• Cloud Security: Delivering robust cybersecurity solutions via a cloud-based architecture.
• Identity Protection: Safeguarding digital identities from compromise.
• SIEM (Security Information and Event Management): Detecting and addressing potential security threats and vulnerabilities.
• Threat Intelligence: Leveraging threat data to prevent and counteract cyber events.
• Data Protection: Ensuring sensitive information remains secure.
• Exposure Management: Proactively identifying, assessing, and addressing exploitable risks.

CrowdStrike integrates all these functionalities into a single platform, The Falcon Platform, delivering an unmatched level of simplicity and efficiency. According to Yahoo Finance, there is growing demand among companies to consolidate multiple-vendor solutions into a single platform to reduce complexity and cut costs. CrowdStrike’s Falcon Platform fulfills this need, offering a streamlined, all-in-one solution.

Unlike competitors such as Palo Alto Networks, which rely on 3 separate consoles, CrowdStrike’s unified Falcon Platform delivers significant operational advantages. It enables 66% faster investigations and enhances security operations center (SOC) efficiency by consolidating data and tools into a single console.

Furthermore, CrowdStrike’s cloud-native architecture eliminates reliance on hardware-defined network perimeters, providing flexibility and scalability. This architecture, combined with its innovative approach, results in a lower total cost of ownership (TCO) compared to rivals like Microsoft and Palo Alto Networks.

In a landscape where cybersecurity solutions are becoming increasingly fragmented, CrowdStrike stands out by offering a comprehensive, cost-effective, and efficient platform. This strategic positioning not only caters to growing market demand but also solidifies CrowdStrike’s competitive edge in the cybersecurity industry.

CrowdStrike’s Strategic Acquisition of Adaptive Shield

On November 6, 2024, CrowdStrike announced its acquisition of Israeli cybersecurity startup Adaptive Shield. This move is a strategic effort to enhance its platform by integrating cloud security and identity protection with comprehensive SaaS (Software-as-a-Service) security solutions.

According to CrowdStrike, the acquisition will enable the company to “deliver the only platform that unifies cloud and identity security with integrated SaaS protection,” offering complete defense against identity-based attacks across modern hybrid cloud environments.

Adaptive Shield brings significant advancements to CrowdStrike’s Falcon platform, including:

• Comprehensive SaaS Security Posture Management (SSPM): End-to-end visibility of identities across hybrid cloud environments, providing operators with unique context for rapid Cloud Detection and Response (CDR).
• GenAI Application Security Control: Ensures AI-integrated applications adhere to security policies, safeguarding sensitive data.
• Unified Hybrid Identity and Cloud Security: Delivers a seamless, all-in-one console and workflow for efficient management and security.
• Enhanced Detection and Response: Accelerates first-party detection and response across multiple security domains through existing integrations.

Adaptive Shield Wins 2024 Frost Radar™: SaaS Security Posture Management (SSPM)

On December 9, 2024, CrowdStrike announced that Adaptive Shield, its recent acquisition, was named the Leader in the 2024 Frost Radar™: SaaS Security Posture Management (SSPM) report. Adaptive Shield achieved the highest and farthest-right position among all evaluated vendors, underscoring its industry-leading capabilities.

This recognition highlights CrowdStrike’s strategic foresight in acquiring Adaptive Shield and integrating its cutting-edge solutions into the Falcon Platform. By leveraging Adaptive Shield’s advanced SaaS security capabilities, CrowdStrike is addressing the growing demand for unified, end-to-end cybersecurity solutions tailored to modern hybrid cloud environments.

The acquisition also reinforces CrowdStrike’s commitment to innovation and adaptability in the rapidly evolving cybersecurity landscape. Integrating Adaptive Shield enables CrowdStrike to:

• Expand its total addressable market (TAM) by addressing critical SaaS security needs.
• Deliver unmatched value to customers by providing comprehensive protection against sophisticated threats.
• Strengthen its competitive edge in the face of growing demand for holistic cloud and identity security solutions.

Therefore, by combining Adaptive Shield’s expertise with its existing capabilities, CrowdStrike is well-positioned to capitalize on the expanding cybersecurity market and further solidify its role as a global leader in the industry.

CrowdStrike Faces Fallout from Catastrophic IT Outage

On Friday, July 19, 2024, CrowdStrike released a defective configuration update for its Falcon software, triggering a massive global IT outage. Over 8.5 million Microsoft Windows computers crashed worldwide, marking one of the most significant IT disruptions in history. The outage impacted critical sectors, including airlines, airports, public transportation, healthcare, and financial services, with severe cascading effects.

The aviation industry was hit hardest, with over 10,000 flights canceled or significantly delayed. Delta Airlines bore the brunt of the crisis, suffering losses exceeding $500 million due to more than 7,000 flight cancellations within a week. As a result, Delta has filed a lawsuit against CrowdStrike, highlighting the immense financial toll.

The broader financial damage caused by the outage is estimated to exceed $10 billion globally. In its Q3 earnings report, CrowdStrike disclosed that the July 19 incident incurred $33.9 million in related costs. While the company’s CEO publicly took responsibility for the incident and pledged to overhaul its update processes to prevent future issues, the reputational damage remains significant.

Despite the fallout, Microsoft invited CrowdStrike to participate in its Windows Endpoint Security Ecosystem Summit on September 10. This decision signals Microsoft’s continued trust in CrowdStrike’s capabilities, even in the wake of the crisis.

However, the July outage serves as a stark reminder of the critical importance of rigorous testing and quality control in IT deployments. The event has cast a shadow over CrowdStrike’s operational reliability, raising questions about its risk management and operational resilience.

CrowdStrike’s Expanding Market Opportunity

In today’s increasingly digitized world, the risk of cyberattacks continues to escalate. According to CrowdStrike, Cloud exploitation cases surged by 110% last year, while identity-based attacks increased by 75%. With companies relying on hundreds of SaaS applications, managing access, control, and visibility has become a significant challenge.

CrowdStrike highlights the complexity, stating:

“Security teams face significant challenges in maintaining visibility into who has access, what sensitive data is exposed, and active threats – even with purpose-built SaaS protection.”

This rising threat landscape underscores the growing demand for Managed Detection and Response (MDR) services, a key segment of the cybersecurity market. The total addressable market (TAM) for cybersecurity is projected to grow to $225 billion by 2028, representing a $6.2 billion increase and a compound annual growth rate (CAGR) of 22.8% over the next four years, according to Yahoo Finance.

CrowdStrike, however, is even more optimistic, projecting its TAM to double to $250 billion by 2029. This reflects not only the increasing reliance on cloud-based and identity-driven systems but also the growing recognition of the importance of comprehensive cybersecurity solutions.

Thus, as businesses grapple with these evolving threats, companies like CrowdStrike are well-positioned to capitalize on the expanding cybersecurity market by offering cutting-edge solutions tailored to meet modern security demands.

Mixed Financials: Growth Amid Challenges

In Q3 2024, CrowdStrike demonstrated a strong financial performance, despite its GAAP net income loss, showcasing its resilience and market leadership in the cybersecurity sector.

Revenue and Profitability

• GAAP Revenue reached $1.01 billion, 28.52% yoy increase.
• Total GAAP Gross margin stable at 75%.
• The July 19th incident had a total cost of $33.9 million.
• GAAP Net income loss of $16.8 million.
• Revenue has grown in every major region. 
• Subscription revenue up to 963 million, 31.5% yoy increase. 

Cash Flow and Market Performance

• Free cash flow of $231 million, 4% decrease yoy.
• Stock price surged 76.5% following the July 19th outage incident. 
• Year-to-date stock performance shows a 45.27% increase.

Market Position

• 23.14% world-wide market share of Endpoint Protection Cyber Security company.
• 5th year in a row being the Leader in the Gartner Magic Quadrant for endpoint cyber security. 
• Close to 30,000 customers as of July, 2024.
• 300/500 fortune 500 companies choose CrowdStrike.
• 43 of the 50 U.S. states, 8 of the 10 financial service firms, 8 of the top 10 food and beverage companies choose CrowdStrike.

Valuation Considerations

• Current P/E ratio stands at -912.16, significantly lower than competitors like palo Alto networks (P/E of 276.69)
• The extremely low P/E is due to the CrowdStrike losing money and having a net income loss. 
• For context, Palo Alto Networks had a P/E of -285 in 2022 and it went to 1442 in just one year. 
• CrowdStrike’s sales-to-price ratio (P/S) is 23% which is below the 5 year average of 29%.

Should You Worry About CrowdStrike Losing Money?

CrowdStrike continues to demonstrate strong performance, with 27% year-over-year growth in Annual Recurring Revenue (ARR) and 29% YOY growth in total revenue for Q3. Importantly, revenue growth was recorded across all regions, underscoring the company’s global reach and demand for its cybersecurity solutions.

The reported net income loss of $16.8 million for the quarter was primarily driven by increased operating expenses, which were $98 million higher than the previous quarter, largely due to the indirect impacts of the worldwide outage in July including costs to make sure the outage never happens again. Notably, the loss was not a result of insufficient revenue generation but rather a temporary spike in expenses.

CrowdStrike also maintains a strong financial position with $4.26 billion in cash and cash equivalents, compared to a relatively low $792 million in debt. This solid balance sheet provides the company with flexibility to invest in growth initiatives and weather short-term challenges.

Despite the net income loss, the combination of robust revenue growth, low debt levels, and continued market leadership solidifies my belief that CrowdStrike remains a buy. The company’s innovative platform and expanding presence in the rapidly growing cybersecurity market make it an attractive long-term investment opportunity.

CRWD Stock Forecast: Analyst’s Consensus:

The market analyst’s forecast CRWD stock to be at an average $373.38, with a high of $540 and a low of $185. Analyst recommendations are primarily “Buy” showing analyst optimism for CRWD. 

CRWD’s Outlook For 2025

For 2025, I recommend a Buy rating on CrowdStrike. The company is revolutionizing the cybersecurity industry with its innovative, all-in-one platform approach, consolidating endpoint, cloud, identity, and SaaS security into a single, seamless solution. As the first major player to deliver such a comprehensive platform, CrowdStrike is well-positioned to lead the market and capture the largest global market share as competitors shift to adopt similar models.

Despite reporting a net income loss in the most recent quarter due to the global IT outage, CrowdStrike’s financial performance continues to demonstrate strong growth and resilience. Its ability to recover from setbacks, coupled with its proactive approach to innovation, highlights its strength as a market leader.

As the frequency and sophistication of cyberattacks rise, the demand for robust, unified cybersecurity solutions will only grow. CrowdStrike is uniquely poised to capitalize on this trend, making it an attractive long-term investment for those looking to gain exposure to the rapidly expanding cybersecurity market. With its strong positioning, innovative edge, and growing market opportunity, CrowdStrike offers significant potential for forward-looking investors.

It’s important to note that I Know First’s stock-picking AI shows a strong buy which reinforces my outlook on CRWD. The light green indicates a mildly bullish short-term forecast, while the darker green signifies a strong bullish signal for the one-year projection. 

Past Success with CRWD Stock Forecast

I Know First has been bullish on the CRWD stock forecast in the past. On October 22, 2023, the I Know First algorithm issued a 1-year forecast for CRWD stock price and recommended CRWD as one of the best stocks to buy in the S&P 500 package. The AI-driven stock prediction was successful on a 1-year time horizon, resulting in a 72.58% gain.