Shares of cybersecurity company CrowdStrike Holdings (CRWD) have shown signs of recovery after a significant stock drop following a company-wide outage that impacted numerous industries and companies, including Microsoft. As the company prepares to release its second-quarter earnings, the stock is likely to remain volatile in its recovery phase.
CrowdStrike is actively addressing the competitive landscape that has emerged in the wake of the global outage. This issue is expected to be a central point of discussion when the company reports its second-quarter financial results. Analysts predict that CrowdStrike will report revenue of $958.70 million for the second quarter, a substantial increase from the $731.6 million reported in the same period last year, according to data from Benzinga Pro. Earnings per share are anticipated to reach 98 cents, compared to 74 cents per share in the second quarter of 2023.
CrowdStrike has consistently exceeded analysts’ revenue and earnings per share estimates for over 10 consecutive quarters. The company will have a chance to maintain this impressive streak on Wednesday, August 28, when it reports its second-quarter results after market close. Prior guidance from the company indicates revenue between $958.3 million and $961.2 million, and earnings in the range of 98 to 99 cents per share.
While the July 19 global outage may have had a minimal impact on the second-quarter results, the true focus will be on the guidance and commentary regarding the company’s future trajectory. CrowdStrike had previously raised full-year guidance for revenue and earnings per share. These figures could be subject to revision given the potential loss of revenue from customers who may have switched providers and the financial implications of potential lawsuits and settlements arising from the outage. The company will likely provide details on how it addressed the issue, its progress, and its strategy for regaining customer trust and accounts.
The direction of the stock is likely to be influenced by the commentary provided and any adjustments to guidance, whether upward, downward, or a reiteration of the previously raised figures.
Examining CrowdStrike’s year-to-date chart, it’s evident that the company’s shares have actually gained 4.8% in 2024. The outage caused a significant decline, with shares dropping from a closing price of $343.05 on July 18 to an opening price of $294.51 on July 19. Trading on that day ranged from $290.10 to $316.75. CrowdStrike’s shares have continued to decline since then, further impacted by the broader market downturn on August 5, which hit the technology sector particularly hard. Over the past month, CrowdStrike shares have decreased by 1.4%, nearing a recovery from the August 5 losses and subsequent decline.
A positive earnings report and/or an optimistic update on guidance could trigger a rally in CrowdStrike shares, bringing them closer to the opening price of $294.51 on July 19 and potentially approaching the $343.05 level observed before the outage.
CrowdStrike shares closed Thursday at $267.64, within a 52-week trading range of $141.97 to $398.33.
