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Why CrowdStrike Stock Jumped 22.5% in January

By Keith Noonan - Updated Feb 4, 2020 at 6:58AM

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Rising cybersecurity threats elevated the company's share price last month.

What happened

Shares of CrowdStrike Holdings (CRWD 0.47%) rose 22.5% in January, according to data from S&P Global Market Intelligence. The stock climbed early in the month following heightened tensions between the U.S. and Iran, and it continued to climb after the company presented at the Needham Growth Conference and published a new threat-assessment report. CRWD Chart

CRWD data by YCharts.

The U.S. military conducted a drone strike on an airport in Baghdad on Jan. 3 that killed top Iranian general Qassim Suleimani, and CrowdStrike's shares advanced amid the prospects of elevated cyberwarfare between the two countries. CrowdStrike then gave a presentation at the Needham conference and published new research on Jan. 14 showing a variety of rising threats, which also corresponded to gains for the stock. 

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Image source: Getty Images.

So what

CEO George Kurtz appeared on CNBC's Mad Money on Jan. 6 and stated that the Iranian government could respond to the killing of Suleimani by ramping up cyberattacks on the U.S. The company provides cybersecurity services to the U.S. government, and the potential for an increased threat on the heels of escalating military tensions appears to have bolstered bullish sentiment for its stock. 

Shares continued to climb leading up to CrowdStrike's presentation at the Needham Growth Conference on Jan. 14. The company paired its presentation with the release of a report on trends in cybersecurity threats in 2019. The report found that attackers had increased targeting of cloud-infrastructure services and developed improved capacity to hide their activities, along with other trends that pointed to heightened security needs.

Now what

CrowdStrike published its third-quarter results in December and issued new guidance for the January quarter and the full-year period. For the 2019 fiscal year, the company is guiding for revenue between $465.2 million and $468 million, and a non-GAAP (adjusted) loss between $78.6 million and $80.5 million. The company's adjusted loss per share for the year is projected to be between $0.52 and $0.53 based on a weighted average share count of 146.7 million, although the company expects to close out the fourth quarter with 205.2 million shares outstanding.

Cybersecurity will only become increasingly important as more economic and governmental functions depend on software and data, and CrowdStrike's potential for growth in the public and private sectors could help it continue delivering rapid expansion. But investors will have to weigh that potential against a growth-dependent valuation. Shares trade at roughly 18.5 times forward sales estimates. 

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool owns shares of CrowdStrike Holdings, Inc. The Motley Fool has a disclosure policy.

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CrowdStrike Holdings, Inc. Stock Quote
CrowdStrike Holdings, Inc.
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