The latest dip in technology stocks has many investors taking a hard look at CrowdStrike Holdings (NASDAQ:CRWD) stock.
CrowdStrike is a computer security company founded almost a decade ago with a “cloud first” model. It has since become a leading endpoint security vendor. Revenue should grow over 50% this year, approaching $1.5 billion. There may even be profits, albeit small.
Leadership in a popular niche has made CrowdStrike an extremely profitable investment. The market cap is $54.5 billion. But when the sell orders come in, stocks selling at 36x revenue are often the first to be sold. Shares are down 12% since the end of August.
The question of the day is, buy the dip?
Leadership in Question
Computer security is a tough business. Leadership can easily be overcome by new techniques. Growth can be great, but companies must invest ahead of that growth. Losses are the norm. Stocks can be volatile. That’s why it makes sense to wait for a correction, like the one now underway, before pouncing on them.
The question for CrowdStrike is whether it can maintain its leadership against new competitors like SentinelOne (NYSE:S), which came public in June. SentinelOne’s approach is to use an artificial intelligence algorithm to get ahead of the bad guys. The stock has outperformed CrowdStrike’s since its IPO.
Goldman Sachs (NYSE:GS) recently downgraded CrowdStrike based on its price. Analyst Brian Essex called SentinelOne his favorite play in endpoint security.
As tech stocks have rolled over in September, SentinelOne has rolled over more, down 23% since Sept. 16. CrowdStrike is down just 4% since then.
Still Being Boosted
CRWD stock still has its boosters. One is our Louis Navellier. Second quarter earnings beat estimates, he writes, with 1,660 new subscription customers.
An executive order telling agencies to beef up cybersecurity was followed by CrowdStrike getting its Falcon Forensics listed on the government’s govcloud. Falcon Forensics also received FedRAMP authorization, making it easier for bureaucrats to buy. This means more government revenue is on the way. Navellier called the stock comfortably within his buy…