Crowd Strike, although an incredible company that is rapidly growing, is a complete rip off right now. If you multiplied the total Class A and B shares by $ 70.00 high you would get a valuation of $14,135,982,257. This is obviously outrageous, even by historically low-interest rates/Trump Bull Run standards.
You can imagine the typical reaction you’d get if you said this to somebody who bought it; “It doesn’t matter, it’s a great company, just buy and hold and all those wrinkles will eventually flatten themselves out”. Think about it this way, a Mercedes Benz is a great car, but is it worth $10 000 000? Of course not. Please, wait for this company to come back down to reality before you jump over the deep end.
60% of the fully diluted outstanding shares are owned by 3 entities…That should ring some alarm bells. Once those shares start freely trading, the price will probably tank. Not good for the average mom and pop investor, that’s for sure. With only 18 000 000 Class A shares, the addition of 178 688 971 new shares would result in almost 90% dilution in the secondary markets…
Okay, brace yourselves people, we are going to do something that might seem rather unconventional; we are going to divide the total additional paid in capital prior to this offering by the total Class B stock…………
$493 000 000
Divided by 178 688 97
EQUALS…………..$2.75!!!
Let’s do some more fun little math problems. What was the closing price today? 64? Okay, let’s divide 64 by 2.75.
What do you get?
23.2727272727. That means the average gain on the Class B shares, if they were sold today, would be 2327.272727%!!!!!
Now that’s not completely fair. Yes, the average price is $2.75, but, the Series A-1 shares were priced at 50 cents, which is a bit of an outlier compared to the rest of the preferred shares. The image below is a table of each class of redeemable preferred stock
Lets us, just for fun, see what the implied profit would be for each letter in this varied alphabet of stock
The A’s………………………………. 12900% in profits
For the B’s………………………………………4571%
And for the C’s! 1422% in gains!!
Starting to understand why this valuation is ridiculous?
Okay, now let’s take a look at the book value. Even though this isn’t as relevant to this company since most of the value is intangible (i.e., people, know-how, intellectual property), it still sheds light on the extreme amount of dilution one would face if they were to buy this stock at the current price.
Pro Forma dilution is $30?….on a $34.00 stock?…….Makes sense. In order for profit margins like this to occur, almost always, there has to be a counter-party who loses big time, or else where is all this profit going to come from, especially when it is obtained without the receiver of these profits lifting so much as finger, as is the case here with Warburg Pincus, Accel, and “Capital G” (formerly Google Capital 2016, L.P…. so Google)
At least they warn us. A small remnant that is still remaining from the blue sky’s laws created way back following the Great Crash of 1929. Can you imagine the theatrics that went on back then?!
Gross profits of $162 million. That’s a pretty penny, right? Not so fast. The valuation of the company is 14 billion remember? Like we said before, we go against the grain here, do things others don’t do, so we are going to calculate how long it would take to break even if you were to buy the stock right now. …………….Here comes the magic people. Are you ready for this?
14 billion………………………………………………………………………………..
divided by…………………………………………………………………………………….
162 million………………………………………………………………………………………………………………………
…………………………………………………………………………………………………
……………………………………………………………………………………………………………..
…………………………………………………………………………..
…………………………………………………………………………………….Equals
86 YEARS!!!!! Yes!!! Just a little over the average life span for an American Citizen. Think about it. If you bought a business that was priced 86 times higher then its yearly earnings, how long is it going to take to pay it back? 86 years right?
You see, it’s not that hard to understand. None of this is. Finance is very simple; it’s 2 + 2 =4, not rocket science. It’s just the people who control the industry; the bankers, the lawyers, stockbrokers, the fund managers; they all like to guard their knowledge, just like in any profession, so they use all this bullshit lingo to keep you ignorant so you keep coming back, like your local mechanic.
Oh, we left out one small detail. That number we just mentioned, it’s not their net income, it’s their gross profit, meaning the money they make BEFORE they pay their bills!
You see that number at the bottom, that $140 077? Yeah? That’s their yearly earnings, not the 193 million we talked about before. It’s NEGATIVE, not positive, NEGATIVE 140 077 MILLION……
Which is completely OK!! They are an AMAZING company experiencing RAPID GROWTH, but $14 billion!?! That’s a little much.
They even tell you that you can’t vote!!!
You can imagine the typical reaction you’d get if you said this to somebody who bought it; “It doesn’t matter, it’s a great company, just buy and hold and all those wrinkles will eventually flatten themselves out”. Think about it this way, a Mercedes Benz is a great car, but is it worth $10 000 000? Of course not. Please, wait for this company to come back down to reality before you jump over the deep end.
60% of the fully diluted outstanding shares are owned by 3 entities…That should ring some alarm bells. Once those shares start freely trading, the price will probably tank. Not good for the average mom and pop investor, that’s for sure. With only 18 000 000 Class A shares, the addition of 178 688 971 new shares would result in almost 90% dilution in the secondary markets…
Okay, brace yourselves people, we are going to do something that might seem rather unconventional; we are going to divide the total additional paid in capital prior to this offering by the total Class B stock…………
$493 000 000
Divided by 178 688 97
EQUALS…………..$2.75!!!
Let’s do some more fun little math problems. What was the closing price today? 64? Okay, let’s divide 64 by 2.75.
What do you get?
23.2727272727. That means the average gain on the Class B shares, if they were sold today, would be 2327.272727%!!!!!
Now that’s not completely fair. Yes, the average price is $2.75, but, the Series A-1 shares were priced at 50 cents, which is a bit of an outlier compared to the rest of the preferred shares. The image below is a table of each class of redeemable preferred stock
Lets us, just for fun, see what the implied profit would be for each letter in this varied alphabet of stock
The A’s………………………………. 12900% in profits
For the B’s………………………………………4571%
And for the C’s! 1422% in gains!!
Starting to understand why this valuation is ridiculous?
Okay, now let’s take a look at the book value. Even though this isn’t as relevant to this company since most of the value is intangible (i.e., people, know-how, intellectual property), it still sheds light on the extreme amount of dilution one would face if they were to buy this stock at the current price.
Pro Forma dilution is $30?….on a $34.00 stock?…….Makes sense. In order for profit margins like this to occur, almost always, there has to be a counter-party who loses big time, or else where is all this profit going to come from, especially when it is obtained without the receiver of these profits lifting so much as finger, as is the case here with Warburg Pincus, Accel, and “Capital G” (formerly Google Capital 2016, L.P…. so Google)
At least they warn us. A small remnant that is still remaining from the blue sky’s laws created way back following the Great Crash of 1929. Can you imagine the theatrics that went on back then?!
Gross profits of $162 million. That’s a pretty penny, right? Not so fast. The valuation of the company is 14 billion remember? Like we said before, we go against the grain here, do things others don’t do, so we are going to calculate how long it would take to break even if you were to buy the stock right now. …………….Here comes the magic people. Are you ready for this?
14 billion………………………………………………………………………………..
divided by…………………………………………………………………………………….
162 million………………………………………………………………………………………………………………………
…………………………………………………………………………………………………
……………………………………………………………………………………………………………..
…………………………………………………………………………..
…………………………………………………………………………………….Equals
86 YEARS!!!!! Yes!!! Just a little over the average life span for an American Citizen. Think about it. If you bought a business that was priced 86 times higher then its yearly earnings, how long is it going to take to pay it back? 86 years right?
You see, it’s not that hard to understand. None of this is. Finance is very simple; it’s 2 + 2 =4, not rocket science. It’s just the people who control the industry; the bankers, the lawyers, stockbrokers, the fund managers; they all like to guard their knowledge, just like in any profession, so they use all this bullshit lingo to keep you ignorant so you keep coming back, like your local mechanic.
Oh, we left out one small detail. That number we just mentioned, it’s not their net income, it’s their gross profit, meaning the money they make BEFORE they pay their bills!
You see that number at the bottom, that $140 077? Yeah? That’s their yearly earnings, not the 193 million we talked about before. It’s NEGATIVE, not positive, NEGATIVE 140 077 MILLION……
Which is completely OK!! They are an AMAZING company experiencing RAPID GROWTH, but $14 billion!?! That’s a little much.
They even tell you that you can’t vote!!!
Comment:
****DISCLAIMER****This is all our opinion, and we are not financial advisers. You should consult a financial adviser before making any investment decision with regard to publicly traded securities, or any security for that matter. This company carries an extremely high degree of risk, and we do not hold a position in this stock. You should consider this information as similar to personal insight from a peer/friend/acquaintance, and thus it should, obviously, not be the primary source material for basing an investment decision, because, similar to any opinion from a peer/friend/acquaintance, it could be completely and utterly incorrect! Good luck and happy trading everyone****
Comment:
July. 08, 2019 "Credit Suisse analyst Brad Zelnick started coverage of Crowdstrike with a Neutral rating and $70 price target"
Comment:
SunTrust analyst Terry Tillman initiated Crowdstrike with a Hold rating and a price target of $69, thefly reports
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"Macquarie analyst Sarah Hindlian initiated Crowdstrike with an Outperform and $75 price target". thefly reports
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Goldman Sachs started Crowdstrike with a Neutral rating and $66 price target. thefly reports
Comment:
Jefferies analyst John DiFucci started Crowdstrike with a Hold rating and $71 price target. While the company has shown early success in a land/expand strategy with "strong" net revenue expansion, it's valuation is also the richest in in the space, thefly reports
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Looking to add the rest 72-75ish
Comment:
Should have added the rest on that momentum through 70. It was getting late in the trading session, so another 1/4 would have sufficed
Comment:
Adding to that previous comment (tradingview doesn't let you edit), it's currently sitting at $68.40 as of 3:08pm
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$68.09 as of 3:53pm
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Closed $66.91!!!
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Don't want to speak too soon but we fuckin killed this....Missed that nice add over 70, but the timing was still great. Analyst buy ratings, look to short them
Comment:
66.25 in the premarkets!! 9:19am!
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Spoke too soon, 67.50 as of 9:41