CrowdStrike Holdings Pre-earnings Analysis


CrowdStrike Holdings Pre-earnings Analysis

Chart done on hourly timeframe. CrowdStrike investors have enjoyed the stock rally over the past 12 months, but the rally will be tested today as the company reports its quarterly earnings. Quarter over quarter earnings are projected to slightly decline as analysts scare their estimates back, but CRWD has a history of coming in above expectations so we expect them to come in line. Unfortunately, a simple earnings beat won’t be enough to move the needle considering the company’s hefty valuation. The stock’s rally has raised its market valuation to 75B, which is a large number considering they’re only grossing 3B in revenue. Yes, revenue growth has been substantial at double digit percentage points over the last seven years, but it is still not enough to justify the cost. Their price to earnings ratio is also extremely high at 864x, far above the healthy 15-25 range. The company will need to start posting much larger profits in order to justify their valuation, or else they’re set for a correction.

Option chain analysis:

CRWD’s option chain expiring on June 21 2024 currently reflects an implied volatility reading of 83%, which translates to about a $45 move from the underlying stock between now and then. The direction of that move will depend on their earnings outcome and call.