CrowdStrike (NASDAQ:CRWD) stock has experienced significant volatility this year, beginning with a robust rally from below $350 in early January to exceeding $450 by mid-February. However, this upward momentum abruptly reversed due to several negative developments.
The downturn began when the U.S. Department of Justice and Securities and Exchange Commission launched investigations into a $32 million deal with Carahsoft Technology. Compounding these regulatory concerns, CrowdStrike recently issued forward guidance that failed to meet analyst expectations.
Market conditions further exacerbated CrowdStrike’s challenges, as broader investor anxiety about potential tariff impacts on inflation and economic growth created additional headwinds. This combination of company-specific issues and unfavorable market sentiment has driven CRWD stock down approximately 20% from its February peak, returning to around $360 per share.
Now that CRWD stock has seen a decline, it looks attractive but volatile – making it a tricky pick to buy at its current price of around $360. We believe there is minimal cause for concern with CRWD stock, which makes it attractive, but highly sensitive to adverse events as its current valuation is extremely high. Although the high valuation seems justified, given the rapid revenue and earnings growth lately.
We arrive at our conclusion by comparing the current valuation of CRWD stock with its operating performance over the recent years as well as its current and historical financial condition. Our analysis of CrowdStrike along key parameters of Growth, Profitability, Financial Stability, and Downturn Resilience shows that the company has a very strong operating performance and financial condition, as detailed below. That said, if you seek upside with lower volatility than individual stocks, the Trefis High-Quality portfolio presents an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since its inception.
How Does CrowdStrike’s Valuation Look vs. The S&P 500?
Going by what you pay per dollar of sales or profit, CRWD stock looks very expensive compared to the broader market.
• CrowdStrike has a price-to-sales (P/S) ratio of 23.1 vs. a figure of 3.2 for the S&P 500
How Have CrowdStrike’s Revenues Grown Over Recent Years?
CrowdStrike’s Revenues have grown considerably over recent years.
• CrowdStrike has seen its top line grow at an average rate of 40% over the last 3 years (vs. increase of 6.3% for S&P 500)
• Its revenues have grown 29% from $3.1 Bil to $4.0 Bil in the last 12 months (vs. growth of 5.2% for S&P 500)
• Also, its quarterly revenues grew 25% to $1.1 Bil in the most recent quarter from $845 Mil a year ago (vs. 5.0% improvement for S&P 500)
How Profitable Is CrowdStrike?
CrowdStrike’s profit margins are worse than most companies in the Trefis coverage universe.
• CrowdStrike’s Operating Income over the last twelve months period was $-120 Mil, which represents a very poor Operating Margin of -3% (vs. 13.0% for S&P 500)
• However, on an adjusted basis, CrowdStrike’s operating margin stood at 21.2% for the last twelve months period.
• CrowdStrike’s Operating Cash Flow (OCF) over this period was $1.4 Bil, pointing to a high OCF-to-Sales Ratio of 35% (vs. 15.7% for S&P 500)
Does CrowdStrike Look Financially Stable?
CrowdStrike’s balance sheet looks very strong.
• CrowdStrike’s Debt figure was $789 Mil at the end of the most recent quarter, while its market capitalization is $89 Bil (as of 3/21/2025). This implies a very strong Debt-to-Equity Ratio of 0.9% (vs. 19.0% for S&P 500). [Note: A lower Debt-to-Equity Ratio is desirable]
• Cash (including cash equivalents) makes up $4.3 Bil of the $8.7 Bil in Total Assets for CrowdStrike. This yields a very strong Cash-to-Assets Ratio of 49% (vs. 14.8% for S&P 500)
How Resilient Is CRWD Stock During A Downturn?
CRWD stock has seen an impact that was worse than the benchmark S&P 500 index during the recent downturns. While investors have their fingers crossed for a soft landing by the U.S. economy, how bad can things get if there is another recession? Our dashboard How Low Can Stocks Go During A Market Crash captures how key stocks fared during and after the last six market crashes.
Inflation Shock (2022)
• CRWD stock fell 58.3% from a high of $239.86 on 13 April 2022 to $99.96 on 28 December 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 7 December 2023
• Since then, the stock has increased to a high of $455.36 on 18 February 2025 and currently trades at around $360
Covid Pandemic (2020)
• CRWD stock fell 50.0% from a high of $66.03 on 19 February 2020 to $33.01 on 16 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 20 April 2020
Putting All The Pieces Together: What It Means For CRWD Stock
In summary, CrowdStrike’s performance across the parameters detailed above are as follows:
• Growth: Extremely Strong
• Profitability: Weak
• Financial Stability: Extremely Strong
• Downturn Resilience: Weak
• Overall: Strong
Surely, CRWD stock trades at rich valuation of 23x trailing revenues, but its average sales growth of 40% and a stellar 85% average growth rate for adjusted earnings, seems to justify the premium valuation. Overall, despite its high valuation, the stock appears attractive but volatile, which supports our conclusion that CRWD is a tricky stock to buy.
Not too happy about the volatile nature of CRWD stock? The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics.
Invest with Trefis
Market Beating Portfolios | Rules-Based Wealth