Crowdstrike is in the early days of the S-Curve for cybersecurity. The sector may have run up a ton in the last year due to COVID, but that doesn't mean that there isn't a lot more room for it to grow from here.
Fundamentals:
- I love the business model of being SaaS cybersecurity, they were the first to master this. The reason I love this is gross margins, which were 73% in 2020 and have been increasing steadily. The absolute leader in this is ADBE with ~87% gross margins, but hey CRWD is young!
- In another nod to ADBE, the SaaS company has 92% subscription revenue and a 77% YoY subscription revenue growth rate.
- Lastly, almost all of their customers have multiple products, a great sign that the subscription revenue is coming from diverse sources.
What isn't there to like?!
Technicals:
- First off, CRWD crushed the earnings estimates this quarter (on 18 March): $264.9M in revenue and an adjusted EPS of 13 cents, topping Street estimates of $250.5M in revenue and an adjusted EPS of 9 cents. What happened then? The stock jumped to ~$211/share the next day and has since fallen nearly 15% to $180. That pull back alone, driven entirely by no-news signals a buying opportunity!
- Second, I'm looking at this on a weekly chart to ensure a good long-term analysis. Since the November 2020 weekly consolidation to $118, we more than doubled to $251 in 14 weeks! Applying a Fib retracement to that trend, we can see that we pulled back exactly*** to the 0.618 level of 168.67. Now, that is truly a remarkable coincidence!
- Lastly, ~$150 would be my absolute stop loss. I like to think that we won't get there, but if $168.67 breaks, then this is the next level where we might find some longer-term support.
The Trade:
So, we established weekly (and daily) support at the higher low of $168.67, and have pulled back ~15% from the profit taking at earnings (and other market factors driving the name down). We have a nice cushion now to buy between $168.67 and $180, and have ST targets of $200, but really $251, the prior all-time high. I don't think CRWD will stop there though. For those of you who are interested in the truly long-term trade, I think this one is a hold until at least 2025, where I would set a price target around $400.
Fundamentals:
- I love the business model of being SaaS cybersecurity, they were the first to master this. The reason I love this is gross margins, which were 73% in 2020 and have been increasing steadily. The absolute leader in this is ADBE with ~87% gross margins, but hey CRWD is young!
- In another nod to ADBE, the SaaS company has 92% subscription revenue and a 77% YoY subscription revenue growth rate.
- Lastly, almost all of their customers have multiple products, a great sign that the subscription revenue is coming from diverse sources.
What isn't there to like?!
Technicals:
- First off, CRWD crushed the earnings estimates this quarter (on 18 March): $264.9M in revenue and an adjusted EPS of 13 cents, topping Street estimates of $250.5M in revenue and an adjusted EPS of 9 cents. What happened then? The stock jumped to ~$211/share the next day and has since fallen nearly 15% to $180. That pull back alone, driven entirely by no-news signals a buying opportunity!
- Second, I'm looking at this on a weekly chart to ensure a good long-term analysis. Since the November 2020 weekly consolidation to $118, we more than doubled to $251 in 14 weeks! Applying a Fib retracement to that trend, we can see that we pulled back exactly*** to the 0.618 level of 168.67. Now, that is truly a remarkable coincidence!
- Lastly, ~$150 would be my absolute stop loss. I like to think that we won't get there, but if $168.67 breaks, then this is the next level where we might find some longer-term support.
The Trade:
So, we established weekly (and daily) support at the higher low of $168.67, and have pulled back ~15% from the profit taking at earnings (and other market factors driving the name down). We have a nice cushion now to buy between $168.67 and $180, and have ST targets of $200, but really $251, the prior all-time high. I don't think CRWD will stop there though. For those of you who are interested in the truly long-term trade, I think this one is a hold until at least 2025, where I would set a price target around $400.