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Equity & Macro Commentary, Technology Investing
CrowdStrike is now more overvalued than Cloudflare, trading at 45-50x sales for barely 26% revenue growth, which are mediocre numbers. Cloudflare's drop after its earnings could be the same script for CrowdStrike. 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
Cloudflare and CrowdStrike valuations are in la-la land. Per a SergeyCYW comparison of growth per unit of EV/sales, Cloudflare trades at 34x sales and CrowdStrike at 30x. 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
Anthropic and OpenAI's inevitable move into cybersecurity threatens CrowdStrike and Palo Alto Networks' valuations. They look like the market's biggest bubble stocks right now; CrowdStrike trades at 40x ARR despite 25% growth and negative GAAP EBIT. x.com x.comÂ
Cloudflare cannot justify a bullish view at a 10000x revenue valuation. x.comÂ
CrowdStrike at 45x revenue is even sillier than its valuation back in 2020, when its fundamentals were far stronger: customer count grew 116%, revenue guidance beat the Street and sales and acquisition costs fell. There was a time to own it; that time is not now. x.comÂ
CrowdStrike is insanely expensive for its growth, at a multiple of 38 now and 30 forward. Datadog, at 24 now and 18 forward, is not cheap but not crazy by comparison. x.comÂ
Palantir, CrowdStrike and Cloudflare are top-tier companies, but their valuations may have reached bubble territory, a reason to book profits on long-term holds. Their combined market cap has grown from about $90B to $840B, and their P/E and P/S multiples price in much future growth. CrowdStrike and Cloudflare in particular trade on hopes that the agentic era, with bots charged for access and usage-based AI pricing, will make revenue explode. Trimming Cloudflare and CrowdStrike has started. … Show more
CrowdStrike at 40x forward sales is hard to take seriously as a best idea into 2027. x.comÂ