Banana3
Professional Trader/Investor, Real Estate Developer, 25 Years’ Experience
CrowdStrike is getting very expensive at 193 times forward earnings, even though demand for cybersecurity will keep rising and the stock could get pricier still. Cloud providers will build their own security for customers. It is a good time to look for hidden cybersecurity plays instead, such as ServiceNow, which bought Armis. x.com
CrowdStrike at 40x forward sales is hard to take seriously as a best idea into 2027. x.com
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.com
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.com
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.com
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.com
CrowdStrike's re-rating reflects a massively expanded market in which security seats are defined by AI agents rather than employees. The Mythos model announcement and a frontier model going rogue with cyber attacks changed the fundamentals since the stock was at $100. It is very expensive versus its history and peers, and @InvestingVisual notes it trades at 109x forward free cash flow, but that does not mean nothing has changed. x.com
CrowdStrike at 30x sales for a $170 billion software company is hard to see ending well. x.com
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.com
CrowdStrike is worth holding through the next cycle because enterprise-scale endpoint security is a fortress every company needs. x.com
CrowdStrike is not a buy because AI lowers software's barriers to entry, undermining the premium in its multiple. At 34x sales and 109x forward earnings on already-cooling 26% growth with a negative operating margin, it is priced for durable 30%-plus growth and an endpoint-security moat that hyperscalers can fold into their bundles for free. x.com
