Should You Buy CrowdStrike Stock Before August 28th?

CrowdStrike Holdings (NASDAQ: CRWD) the stock was hit hard last month, losing nearly 40% of its value in July after the cybersecurity specialist’s faulty software update was found to have caused a massive outage. While CrowdStrike moved quickly to correct its mistake, negative press and threats of lawsuits appear to have largely deterred investors from buying the dip.

However, the fast-growing cybersecurity company is set to release its fiscal second quarter 2025 earnings report (for the three months ended July 31) on August 28. Will the report be solid enough to trigger a change in fortunes? In other words, should investors consider buying CrowdStrike stock before August 28 in hopes of better-than-expected results and guidance?

CrowdStrike’s future results could reveal the extent of the damage it faces

The CrowdStrike incident that occurred on July 19 cost Fortune 500 companies $5.4 billion in losses. Microsoft-based IT systems declined across the globe, while Delta Air Lines apparently took a $500 million hit. Wall Street analysts believe CrowdStrike will likely undertake a lengthy damage control exercise to regain customer confidence.

As a result, CrowdStrike may be forced to discount its solutions, offer compensation to customers who have lost revenue due to the outage, or even offer credit to customers. The details of the true extent of the damage CrowdStrike may face should be evident in the earnings report.

It’s worth noting that CrowdStrike previously guided for revenue of nearly $960 million in the second (mid) quarter, or 31% year-over-year growth. The company’s full-year revenue forecast is $3.99 billion, up 30% from a year earlier. However, analysts slightly lowered their fiscal 2025 revenue estimates and expect CrowdStrike to fall short of full-year guidance. Their revenue estimates for fiscal years 2026 and 2027 have fallen further.

Adding to this uncertainty, stock valuations aren’t exactly cheap.

The stock remains richly valued despite the pullback

CrowdStrike stock currently trades at 20.5 times forward sales. This is well above the US tech sector’s average price-to-sales ratio of 7.8. For a company coming off a major incident that could negatively impact its balance sheet and growth for years, planning an investment in CrowdStrike before the earnings report is too risky a move.

Investors would do well to stay away from this cybersecurity stock until the true extent of the damage it faces from last month’s events emerges on August 28.

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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike and Microsoft. The Motley Fool recommends Delta Air Lines and recommends the following options: long $395 January 2026 calls on Microsoft and short $405 January 2026 calls on Microsoft. The Motley Fool has a disclosure policy.

Should You Buy CrowdStrike Stock Before August 28th? was originally published by The Motley Fool