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Why CrowdStrike Stock Jumped 21.5% Last Month

By Keith Noonan – Updated May 11, 2020 at 9:20AM

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The cybersecurity company is crushing the market in 2020 and is up roughly 55% year to date.

What happened

Shares of CrowdStrike Holdings (CRWD -0.55%) climbed 21.5% in April, according to data from S&P Global Market Intelligence. The cybersecurity company's stock dipped 6.6% amid March's coronavirus-driven sell-offs, but shares posted big gains in conjunction with momentum for the broader market last month.

^SPX Chart

^SPX data by YCharts.

CrowdStrike stock lost ground as coronavirus-related concerns rocked the market in March, but the company published strong fourth-quarter results in the month that helped its share price recover quickly. With the broader market rebounding in April, investors continued to reward CrowdStrike for its rapid fourth-quarter sales growth and encouraging guidance by bidding up the stock. 

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Image source: Getty Images.

So what

Impressive sales momentum and coronavirus-related conditions driving business and communication to digital channels have helped CrowdStrike stock post big gains in 2020.

Shares hit a 52-week low in mid-March. But fourth-quarter results arrived on March 19 and spurred a recovery thanks to performance that included 89% year-over-year sales growth, 92% growth for annual recurring revenue, and subscription gross margin climbing to 75% from 70% in the prior-year quarter. Momentum from the strong Q4 results carried through to April and was amplified by recovery for the broader market.

Now what

The stock has continued to climb in May's trading. The company's share price is up roughly 15% in the month so far.

CrowdStrike is scheduled to report first-quarter earnings and host a conference call after the market closes on June 2. The company is guiding for first-quarter sales between $164.3 million and $167.6 million, representing year-over-year growth of 72.6% at the midpoint of the target. Management is forecasting an adjusted loss per share between $0.06 and $0.07 in the quarter, narrowing substantially from its adjusted loss of $0.47 per share in last year's period.

For the full year, CrowdStrike is targeting sales between $723.3 million and $733.5 million (up roughly 51% annually at the midpoint of the range) and an adjusted loss per share between $0.10 and $0.14. The company posted an adjusted loss per share of $0.42 in 2019, so it looks like the business is quickly moving toward profitability while still delivering impressive sales growth.

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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