TECH - CrowdStrike Up 45% YTD: What Should Investors Do Now? | Benzinga
CrowdStrike Holdings, Inc. (NASDAQ: CRWD) has been a darling of the cybersecurity sector, demonstrating impressive growth and a robust business model. CRWD stock witnessed a remarkable run last year, with the share prices soaring nearly 143% in 2023.
Shares of this cybersecurity solution provider have carried on the momentum this year, with its share price gaining 45.4% year to date (YTD). The stock has also outperformed the Zacks Internet – Software industry's gain of 12.7% during the same time frame.
However, with such a substantial run-up in its stock price, the critical question arises: should investors buy, hold or sell CrowdStrike shares now?
Despite its solid performance and market position, there are several factors that suggest investing in CrowdStrike at its current valuation might be a risky bet. Let's delve into the key reasons.
Image Source: Zacks Investment Research
Lofty Valuations
Despite its solid fundamentals, CrowdStrike's current valuation raises concerns. The stock trades at high multiples relative to its earnings and revenues. Currently, CrowdStrike's price-to-earnings (P/E) and price-to-sales (P/S) ratios are significantly above the industry average.
CRWD stock is currently trading at 84.83X forward 12-month earnings compared with 33.66X for the Zacks Internet – Software industry. Similarly, it trades at 20.25X forward 12-month sales compared with the industry's 2.59X.
These elevated valuations indicate that a lot of future growth is already priced into the stock, leaving it vulnerable to any negative news or earnings misses.
Moreover, closing at $371.32 as of Jul 12, CRWD ...