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Why CrowdStrike Holdings Stock Surged 29.8% in May

By Billy Duberstein – Jun 2, 2020 at 8:40AM

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The cybersecurity company continued its rise as the stay-at-home economy put a premium on cloud-based threat intelligence.

What happened

Shares of cloud-based cybersecurity company CrowdStrike Holdings (CRWD 2.03%) rose 29.8% in May, according to data from S&P Global Market Intelligence. The newly public company didn't report any financial results during the month. In fact, its first-quarter earnings report actually comes out after the bell today.

Still, CrowdStrike rose on a steady wave of optimism stemming from a big recent customer win, along with analyst upgrades throughout the month.

Animation of electronic circuit with the image of a lock on it amid other technology icons streaming out of it.

Image source: Getty Images.

So what

CrowdStrike continued to ride the momentum fueled by its last earnings report in March, which trounced analyst expectations for both results and guidance. The company's market-beating growth numbers got yet another boost in April, when stay-at-home darling Zoom Video Communications (ZM 1.27%) disclosed that it was now employing CrowdStrike's solutions after the videoconferencing company came under fire for lax security controls as use skyrocketed.

Optimism that virtual work, medicine, and education will necessitate more and more cloud-based threat intelligence led several analysts to boost their target prices. Research firm BTIG raised its target price on CrowdStike on May 1, believing that the current work-from-home environment will lead to an acceleration of CrowdStrike's addressable markets.

Now what

After its near-30% run from May 1 and 76% year-to-date gains, a lot of optimism is certainly priced into CrowdStrike shares. Yet the company's incredible 89% growth rate last quarter combined with expanding gross margins is a very tantalizing combination indeed.

On today's earnings call, management has guided to revenue of $164.3 million to $167.6 million and a loss per share of $0.06 to $0.07. Analysts on average estimate $165.3 million in revenue and a loss per share of $0.06.

Yet whether CrowdStrike's results exceed expectations or disappoint, given the ongoing trends of remote work and the need for more secure communications, the long-term future for CrowdStrike's cloud-based AI solutions seems quite bright indeed.

Billy Duberstein owns shares of CrowdStrike Holdings, Inc. His clients may own shares of the companies mentioned. The Motley Fool owns shares of and recommends Zoom Video Communications. The Motley Fool owns shares of CrowdStrike Holdings, Inc and recommends the following options: short August 2020 $130 calls on Zoom Video Communications. The Motley Fool has a disclosure policy.

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Stocks Mentioned

CrowdStrike Holdings, Inc. Stock Quote
CrowdStrike Holdings, Inc.
CRWD
$162.58 (2.03%) $3.23
Zoom Video Communications Stock Quote
Zoom Video Communications
ZM
$74.26 (1.27%) $0.93

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