While artificial intelligence (AI) has been Wall Street's primary catalyst for years, it's not the only trend responsible for lifting the tide. Investors' excitement over high-profile stock splits has played a role in sending Wall Street's major indexes to new heights.
Since the year began, online travel site Booking Holdings and e-commerce-based used-vehicle retailer Carvana have been two of the most talked-about stock-split stocks. Today, arguably the most prominent stock split of the year goes into effect, courtesy of AI-powered cybersecurity solutions provider CrowdStrike Holdings (CRWD -0.15%).
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Stock splits come in two varieties
A stock split is an event that allows a public company to cosmetically adjust its share price and outstanding share count. This change is superficial in the sense that it doesn't alter a company's market cap or its underlying operating performance.
Retail investors' excitement about a stock split often depends on which type of split is being completed. Reverse splits, which are designed to increase a company's share price, are usually shunned by investors. Companies enacting a reverse split are typically struggling and attempting to avoid delisting from a major stock exchange.
NASDAQ: CRWD
Key Data Points
On the other hand, investors typically flock to businesses announcing forward stock splits. This type of split aims to make a company's shares more nominally affordable for retail investors who can't buy fractional shares through their broker.
CrowdStrike has effected a 4-for-1 forward split before today's (July 2) opening bell. The company's share price, which has been hovering around $700, will be reduced to roughly $175, and its outstanding share count will quadruple. This'll make it easier for everyday investors to participate in the CrowdStrike growth story.
Image source: Getty Images.
CrowdStrike possesses well-defined advantages (but is also very pricey)
Shares of CrowdStrike Holdings have soared more than 1,100% since its initial public offering (IPO) in June 2019. This outsize gain is a function of its laundry list of competitive advantages.
On a macro basis, cybersecurity has evolved from a premium for businesses to a necessity. Since hackers don't take holidays, cybersecurity software is always in demand.
CrowdStrike's Falcon security platform is driven by AI and machine-learning solutions, making it more adept than on-premises security solutions at recognizing and responding to potential threats. Though Falcon isn't the cheapest option in the end-user cybersecurity arena, CrowdStrike's high-90% gross retention rate signals superior protection.
Staggering growth.
-- Fiscal.ai (@fiscal_ai) June 4, 2026
CrowdStrike has now grown revenue at more than a 50% CAGR over the last decade.$CRWD pic.twitter.com/4I1UcFqzUA
But the clearest evidence that Falcon is resonating with its customers is the company's add-on sales data. In its latest reported quarter, CrowdStrike notes that 51% of its clients have purchased six or more cloud modules, with 25% supporting eight or more. Add-on sales are a big deal when talking about software-as-a-service solutions that boast an adjusted gross subscription margin of around 80%.
But despite CrowdStrike's jaw-dropping sales growth and otherworldly margins, its stock isn't cheap. History shows that companies at the forefront of game-changing trends haven't been able to sustain price-to-sales (P/S) ratios above 30. CrowdStrike closed out June 26 with a P/S ratio of 35, placing it firmly in bubble territory.
While CrowdStrike's operating results demonstrate that it's firing on all cylinders, there's not much meat left on the bone for investors.
