1 Growth stock down 16% that’s just begging to be bought right now

When it comes to the tech industry, many of the high-profile stories this year revolved around something related to artificial intelligence (AI). There is one notable exception, however.

In recent months, the cyber security company CrowdStrike (CRWD -3.91%) was bogged down by disastrous PR following its errant update on July 19 and the resulting outage for millions of computer systems worldwide. Since the incident, CrowdStrike shares are down 16% at the time of writing.

But in late August, CrowdStrike reported earnings for the second quarter of fiscal 2025. After learning how much the disruption has actually hurt business so far, you might be inspired to get some shares on the decline.

Hope for the best, prepare for the worst

When CrowdStrike reported earnings last month, many investors expected bad news anchored by losing customers, slowing growth and a cloudy outlook. But that mostly didn’t happen.

CrowdStrike CEO George Kurtz discussed the disruption at the start of the earnings call. After explaining what happened and the lessons the company learned from the experience, Kurtz addressed some of the fallout, including deals expected to close in the quarter that are now delayed (but still in the works for the most part). Of course, such dynamics can make growth unpredictable in the short term.

But in an effort to retain customers, management explained that CrowdStrike offers “customer engagement packages” that include things like price concessions or more flexible payment options. Management called the initiative an effort to build “long-term loyalty and drive long-term platform adoption.” The point here is that by offering cheaper packages, CrowdStrike may be able to lock in customers for longer contract periods and cross-sell additional apps over the life of the offer.

Ultimately, management estimates that these new packages will impact recurring revenue by $60 million in the second half of the year. However, if the company executes on its plan to strengthen retention by signing longer-term deals and cross-selling additional products, management believes the bundles “will ultimately lead to greater adoption of the platforms and modules and to deeper partnerships with customers” in the long term.

In other words, CrowdStrike is apparently hoping to sacrifice $60 million in short-term annual recurring revenue (ARR) to support a foundation for long-term customer relationships. Considering the company reported ARR of $3.86 billion as of July 31, that $60 million seems like a worthwhile sacrifice to rebuild its reputation.

Image source: Getty Images.

When in doubt, zoom out

Management’s focus on maintaining its long-term customer relationships is encouraging. During such a tumultuous and abnormal event like the outage, it can be easy to get bogged down in the current issue and lose sight of the bigger picture. This does not seem to be the case with CrowdStrike.

So while price concessions and flexible payment structures may lead to some short-term slack, the opportunity for CrowdStrike engineers, sales teams and product managers to continue to work closely with customers will give them more insight into the points customer preferences and use cases. This could ultimately provide opportunities to get to know customers better, while also identifying new cross-selling opportunities.

During the earnings call, CFO Burt Podbere left shareholders with this bullish outlook: “I think the biggest part for us is as we get into the back half of next year, we’re going to start seeing an acceleration in the business.”

Is CrowdStrike a good stock to buy right now?

CrowdStrike currently trades at a forward price-earnings (P/E) multiple of 68. That’s expensive, even for an industry-leading growth stock, but below, you can see how much the company’s valuation has contracted in after the interruption.

Data by YCharts.

Additionally, even after reporting solid overall results last month, CrowdStrike stock has yet to make a big comeback. Given the disparity between negative sentiment around CrowdStrike’s business and its strong position in reality, I think it’s a great time to take advantage of the recent weakness and get into the stock.