Should You Buy, Sell or Hold CrowdStrike Stock Before Q1 Earnings?

Core Viewpoint - CrowdStrike is expected to report first-quarter fiscal 2026 results on June 3, 2025, with anticipated revenues between $1.1006 billion and $1.1064 billion, reflecting a year-over-year growth of 19.92% [1] - The company expects non-GAAP earnings per share between 64 cents and 66 cents, with a consensus estimate of 66 cents indicating a year-over-year decline of 29% [2] Revenue and Earnings Expectations - The Zacks Consensus Estimate for CRWD's fiscal first-quarter revenues is pegged at $1.1 billion [1] - The earnings consensus has been revised upward by a penny over the past 60 days [2] - Current earnings estimates for the next quarters remain stable, with no significant changes noted in the last 30 days [3] Recent Performance and Market Position - CrowdStrike has beaten the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 11.65% [5] - Currently, CRWD carries a Zacks Rank 4 (Sell) and has an Earnings ESP of 0.00% [6] Factors Influencing Q1 Results - The demand for CrowdStrike's cybersecurity products is expected to benefit from the increasing number of cyber threats and breaches [7] - The company’s robust subscription revenue growth and new customer additions are likely to contribute positively to the top line [8] - Partnerships with Amazon Web Services (AWS) are expected to enhance earnings through increased transaction volumes and co-selling opportunities [9] Compliance and Innovations - CrowdStrike has achieved C5 compliance and FedRAMP authorization, likely increasing government contracts and providing revenue stability [10] - The introduction of AI-based capabilities is anticipated to attract more customers [10] Stock Performance and Valuation - Year-to-date, CRWD shares have increased by 34.1%, outperforming the Zacks Security industry, which returned 17.2% [11] - CRWD is trading at a forward 12-month P/S of 22.29X, compared to the industry average of 14.24X, indicating a stretched valuation [12] Challenges and Competitive Landscape - The company faces challenges due to negative customer sentiment following a global IT outage incident [13] - Competitors like Palo Alto Networks and SentinelOne are positioned to attract CRWD's customer base amid ongoing regulatory scrutiny [16] - CrowdStrike's products compete directly with offerings from other cybersecurity firms, highlighting the competitive nature of the industry [17][18] Conclusion - Given the stretched valuation, revenue compression, and competitive pressures, it is suggested to avoid investing in CRWD stock before the upcoming earnings report [19]