Sign InCRWD Faces Selling Pressure Amid Global Outage Backlash: Technical and Fundamental Analysis
Summary
On July 18, 2024, CrowdStrike Holdings, Inc. (CRWD) closed at $343.05, a 3.35% drop influenced by a major global outage, but despite heightened short-term bearish sentiment, its strong fundamentals and market presence suggest potential for a long-term rebound, making it a 'Hold' candidate for investors.
Technical Analysis
CrowdStrike Holdings, Inc. (CRWD) last closed at $343.05 on July 18, 2024, declining by 3.35% with a $11.89 drop. The stock experienced intraday volatility with a low of $336.34 and a high of $352.20. Currently, CRWD's Relative Strength Index (RSI14) stands at 25, indicating that the stock is oversold, which could signal a potential rebound. However, the stock is trading below both its 50-Day Moving Average of $357.80 and its 200-Day Moving Average of $287.70, reflecting a bearish trend in the short-term.
The Average True Range (ATR) of 3.98 suggests moderate volatility. Support is noted at $342.18, and resistance is identified at $374.57. The Moving Average Convergence Divergence (MACD) of 5.35 points to a marginally bullish momentum over the past three months, but recent news might negate this.
Fundamental Analysis
CrowdStrike, a major player in the cybersecurity sector, has a market cap of $83.48 billion. Its current PE ratio of 647.26 is substantially high, reflecting significant growth expectations. The Earnings Per Share (EPS) of 0.53 suggests limited profitability currently, but it's important to note the company's potential for expansion, supported by a high analyst consensus price target median of $370 and a high target expectation of $437.
The company's discounted cash flow (DCF) valuation of $366.96 indicates that the stock is potentially undervalued relative to its intrinsic value, suggesting upward long-term performance potential. CRWD's earnings announcement scheduled for September 4, 2024, will be critical in assessing short-term market reactions and long-term growth trajectories.
Relevant News Analysis
Recent news reports have spotlighted a significant backlash for CrowdStrike due to a major global outage attributed to a flawed anti-viral update. This outage has impacted crucial sectors like airlines and financial institutions, increasing bearish sentiment and prompting heightened selling pressures. This adverse event is likely to weigh on CRWD in the near-term, potentially leading to further declines in stock price as indicated by premarket trends and the rise in put options.
Predictions and Evaluation
For the next trading day (July 19, 2024), following the adverse news, CRWD is expected to face increased selling pressure. The stock might dip further, potentially testing recent support levels. For the upcoming week, volatility is anticipated to remain high, and the stock could face continued downward pressure unless there is a mitigating positive development or clarification from the company.
Despite this short-term challenge, long-term prospects for CRWD align with its strong positioning in the cybersecurity market. If the company can effectively manage and resolve the current crisis, it has the potential to bounce back due to solid underlying fundamentals and market demand for cybersecurity solutions.
Overall Evaluation: Hold
Given the data, CRWD is currently categorized as a 'Hold' candidate. While the latest outage and ensuing market reaction introduce near-term risks, the company's long-term potential, supported by analyst targets and intrinsic value assessments, offers a favorable outlook. Long-term investors might consider maintaining their positions, closely monitoring company responses and market developments.
