CrowdStrike (NASDAQ:CRWD) saw its stock fall about 7% in extended trading on Tuesday, June 3, despite reporting better-than-expected Q1 earnings. The company reported adjusted earnings per share of $0.73 on sales of $1.10 billion, surpassing consensus estimates of $0.65 earnings per share on the same sales figure.
CrowdStrike’s positive Q1 performance was overshadowed by a weaker-than-expected outlook for the current quarter. CrowdStrike anticipates Q2 earnings of $0.82 per share on revenue of around $1.14 billion. This forecast fell short of street expectations, which projected $0.81 in earnings per share but $1.16 billion in revenue.
Additionally, while Q1 revenue increased nearly 20%, the company’s adjusted operating margin plunged 500 basis points year-over-year to 18%, amid increased costs for its professional services business and higher R&D spending.
On a more positive note, CrowdStrike raised its full-year earnings guidance, now expecting $3.44 to $3.56 in adjusted earnings per share, which is above the consensus of $3.43. However, it maintained its sales outlook of $4.74 billion to $4.81 billion, aligning with the consensus of $4.77 billion. The company also announced a $1 billion share buyback program.
Given the upbeat Q1 results, raised full-year earnings guidance, and the share buyback program, the stock’s decline might seem puzzling. However, investors appear to be reacting to more than just the minor Q2 revenue forecast miss. CrowdStrike’s stock has surged a remarkable 40% this year, significantly outperforming the broader S&P 500 index’s 2% rise. Trading at lofty valuations, even a slight miss on the revenue forecast was enough to unsettle investors.
Now, the critical question is if CRWD stock is a buy at levels of $460. We answer this question here – Is CRWD Stock Overvalued At $460? – based on a comparison of CRWD’s current valuation with its recent operating performance and current and historical financial condition.
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