Stone Fox Capital
Founder, CIO & Portfolio Manager of Stone Fox Capital
SentinelOne's growth is solid and profits are starting to pour in, yet the stock trades at only 5x forward sales. It reported $56M of net new ARR, with total ARR of $1.218B, up 22% year over year. Matching CrowdStrike's net new ARR jump would have required about $65M; per @SergeyCYW, CrowdStrike added a record $333M, up 50.5%. x.com x.com x.comÂ
SentinelOne is a good catch-up trade against CrowdStrike, which trades at 34x FY27 sales. SentinelOne would need to double and double again just to reach where CrowdStrike stood at this year's lows. @MrTinvests calls software the trade of the second half of 2026 and notes SentinelOne has broken its descending trendline from the 2024 highs. x.comÂ
SentinelOne appears undervalued relative to its expected revenue growth. Analysts forecast 19.2% NTM revenue growth, versus 23.2% for CrowdStrike, which trades at a premium on forward EV/sales. x.comÂ
CrowdStrike may distinguish itself from an expensive cybersecurity group by showing more breakneck growth at earnings next month. Fortinet's slowing product revenue exposed how much relentless execution investors had priced into the group's extreme multiples, pulling CrowdStrike down in sympathy. CrowdStrike remains in a higher tier than Fortinet, which itself ranks above SentinelOne. x.com x.comÂ
SentinelOne should be growing far faster on about one-fifth of CrowdStrike's revenue, yet its growth keeps slowing. Revenue grew 20% versus CrowdStrike's 23%, billings growth slowed to 11.7%, $100k+ customer additions fell and retention slipped to 109% versus about 115% at CrowdStrike. The GAAP net loss widened to $110M, free cash flow is negative and net margin has not improved since 2024. SBC is 29% of revenue, the share count rose 4.2%, and buybacks make no sense with negative free cash flow. … Show more
SentinelOne is objectively one of the best cybersecurity software companies ever, and its incompetent management is why it trades at only 4x ARR. Few software companies ever reach $1B of ARR, fewer are still growing 20%+ at that scale, and fewer still can be bought at 4x ARR. Its -23% GAAP margin, raised by @davey_juice, is not great. x.com x.com x.comÂ
CrowdStrike's growth is too slow to justify its valuation. Its forward P/E has climbed to about 190, while stock-based compensation exceeds operating earnings, so reported free cash flow margins do not show what the business actually earns. x.com x.com x.com x.comÂ
SentinelOne should be crushed because it offers the same sort of product as CrowdStrike, just worse, and CrowdStrike's flywheel keeps widening the moat between them. The open question is whether cybersecurity is a follow-the-leader market or supports multiple long-term winners, with niche players such as Rubrik and Zscaler and formidable ones such as Cloudflare and Palo Alto Networks. x.comÂ
SentinelOne doesn't need to beat CrowdStrike to work, because cybersecurity is large enough for multiple winners and should keep growing as AI adds agents, cloud workloads and autonomous software that need protecting. It already has more than $1.2 billion of ARR, 20%-plus growth and improving margins. Its growth is the slowest of the group today, but if it remains a major security platform over the next decade, its current valuation leaves a lot of room. x.comÂ
CrowdStrike at 40x forward sales is hard to take seriously as a best idea into 2027. x.comÂ
SentinelOne is a pathetic company because it still runs -23% GAAP margins at about $1B of ARR while growing roughly 20%. Comparable software companies grew 40%+ at that scale while losing less money on a GAAP basis. Per @Sam_Badawi, Q4 revenue rose 20% to $271.2M and ARR 22% to $1.12B, with FY2027 revenue guided to $1.195-1.205B. x.com x.com x.comÂ
CrowdStrike's 45x sales multiple on mid-20% revenue growth only works if multiple expansion continues in perpetuity, which no long holder can count on. x.comÂ
