CrowdStrike is still navigating the aftermath of a July cybersecurity update that disrupted global industries, with Reuters reporting that US authorities are now examining the company's transactions and the outage. The firm announced on Wednesday a second-quarter revenue projection below analyst expectations, driven by a customer retention program offering expanded product access or extended usage. This initiative cut first-quarter revenue by about $11 million and is expected to reduce each subsequent quarter's revenue by $10 million to $15 million.
In afternoon trading, CrowdStrike's shares fell more than 5%, as investors reacted to the weaker outlook. According to Reuters, the outage, which impacted sectors like aviation and healthcare, has sparked legal action, including a Delta Air Lines lawsuit demanding compensation for flight cancellations. Despite these setbacks, CrowdStrike's stock has climbed over 40% this year, building on a 34% rise in 2024. Yet, its valuation – 123.69 times forward earnings, far above Palo Alto Networks' 54.01 – makes it vulnerable to setbacks.
"The steep valuation left little room for any unexpected slip-ups," Russ Mould, investment director at AJ Bell, told Reuters. The company's market value, roughly $122 billion, faced a potential $6 billion drop following the news. On Tuesday, CrowdStrike reported a first-quarter loss, a shift from the prior year's profit.
Still, optimism persists among analysts. Reuters noted that 23 brokerages lifted price targets after the company's first-quarter revenue aligned with expectations and its adjusted profit per share outperformed forecasts. "We believe CrowdStrike is taking share from other vendors across their product offerings," Truist Securities told Reuters, pointing to the firm's strong market position.
