A Fair Valuation for CrowdStrike Stock $CRWD

[@Nanalyze]

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[@derrickkwilliams]

Beautiful presentation. I very much like $CRWD for it’s importance and growth potential. Like you I’m waiting for earnings to add more. I also own $CYBR. I don’t know if you looked at this one. I bought this stock earlier this year (at $126) because the government agency I work for started to roll it out across the agency to implement zero trust for server access. They also use Okta for identity access management. Good picks and keep up the good work.

[@Nanalyze]

Not familiar with Cyberark but thank you for the heads up. This is a mature space so there are lots of companies to choose from. We try to find emerging leaders and are aware there are probably many good firms out there. Depending on interest we may look to cover more cybersecurity names in the future. Thank you for the comment Derrick!

[@matthewpozega4919]

Your videos add plenty of value and education. You are truly appreciated

[@Nanalyze]

Thank you very much for the kind words!

[@WyattCounterman]

Once again- amazing video, Joe. I went long CRWD not long ago along with NET which I know you’ve written about many moons ago. I’d be curious to hear your thoughts on Cloudflare as a “sweet spot” market cap cybersecurity play. It may not be the leader per se, but it does have some niche leadership in DDOS, and content delivery. I know you have many videos to get to, just wanted to voice that the interest exists for a Cloudflare update!

[@Nanalyze]

Thank you for the positive feedback! Yep, it's been a long time since we've written about Cloudflare and we actually use their solutions here at Nanalyze. We'll make a note of that and possibly look to cover the firm.

[@joepiv]

@@Nanalyze Cloudflare covered here: www.nanalyze.com/2023/01/investing-in-cloudflare-stock/

[@someup7786]

Thank you so much for the cyber security video! I've been looking at $FTNT balance sheet and it looks very nice, I won't lie I have a small allocation. I personally wish I knew more about the space to put more into it.

[@Nanalyze]

You're quite welcome. Fortinet is definitely on OG in the cybersecurity space. Agree that the space can be so complex and confusing with loads of overlapping terminology. Since there are no more trading fees, why not just diversify a bit and add a few more names as opposed to trying and cherry-pick the best one? We have to do that because of our business model, but a basket of stocks works just as well here for exposure.

[@mustbeyalla]

Have you thought of doing a video concerning the recent outage caused by crowdstrike and its effects on stock price? Possible opportunity to buy or better wait and see?

[@Nanalyze]

That would be quite a short video based on what we know today. We sent an alert to Premium subscribers with our thoughts on this.

[@brajeshchoudhary7248]

Excellent video. Very informative. As of today price of the stock comes down to $100. I would like to know your thoughts on the current situation. Is the stock a buy at the current price?

[@jadam42]

I’d be curious where CRWD falls now on the Valuation Ratio scale

[@Nanalyze]

@brajeshchoudhary7248 we would consider it a buy at that price at it's currently around 10% below our current cost basis. Use dollar cost averaging and accumulate over a period of time as opposed to pulling the trigger at one go.

[@Nanalyze]

@jadam42 good to learn how to calculate. Take market cap ($23.5 billion) then divide by last quarter's revenues times four (0.581 billion * 4) or $2.32 billion. So it's (23.5 / 2.32 = 10). So then you can compare 10 to other stocks. For example, Snowflake rarely ever trades below 20.

[@rowanwood5397]

1. Bitcoin is fully traceable. The Blockchain published every single transaction that ever occured, forever. But there is no names connected to the transactions. But in order to onboard of offboard that Bitcoin to cash, you need a brokerage account.

[@Nanalyze]

You are both right and wrong. Some may be surprised to know that there are entire companies being built around attaching identities to blockchain transactions, the data of which is being used by regulatory authorities. It's not nearly as anonymous as most people are led to believe. If you're transacting on the blockchain, and the authorities want to find out who you are, they will.

[@neilainsworth1064]

Thanks for the video, i really enjoy your in depth views into tech stocks. Can you explain how you calculate your SVR please.

[@Nanalyze]

Really appreciate the feedback Neil. Here's a piece on the SVR: www.nanalyze.com/2021/06/simple-valuation-ratio-tech-stocks/

[@prtl204]

I watched the video, I heard you advising to wait for quarterly review. And I decided to gamble a bit by buying CRWD a day before earnings report releases......... I'm down bad right now........ Have to try and stay as rational as possible to think about buying the dip

[@Nanalyze]

It's a gamble that can go either way. The idea is that because everyone is upsetting The Street, odds are shares will fall more than they will rise. At any rate, this is a quality company so do not pay attention to short-term price noise. Irrelevant to the long-term thesis. Nobody will never buy at the bottom and sell at the top.

[@daniuskac1527]

Excellent video, Joe! This is a sector that I am willing to invest in. As you said in the video, cybersecurity is a must nowadays. I was hoping that Microsoft will make some acquisitions to reinforce his posture in this sector. Also, I was planning to invest big in C3AI, but I am really looking for under the radar companies that are not doing headlines of the news. I am open to add one or two stocks in this sectors in my new portfolio, and I might sacrifice my dividend strategy for this sector.

[@Nanalyze]

Don't sacrifice your dividend strategy! Those are the slow-moving boring stocks that create true wealth over time. Sure, tech stocks are trading at depressed prices, but always make sure you diversify your assets. You may have a stronger appetite for risk - especially if you're younger - and that's fine, but still make sure you're diversified and not just investing in the tech sector. That said, make decisions based on your own convictions as you'll be the one that has to live with them.

[@daniuskac1527]

@@Nanalyze Thank you Joe for the educational advice! Currently, I have too much exposure in tech, and this is why that I am building a new diversified portfolio where I plan to own only 20 stocks in the key sectors of the economy. Healthcare, utilities, and cybersecurity will be certainly part of this strategy. I am not making the same mistakes that I did in the past. I rather accumulate cash for months even for years if I do no see any low risk opportunities. This strategy consists also to use different brokers for FDIC purposes.

[@Nanalyze]

@@daniuskac1527 Makes a lot of sense. We also use multiple brokers for the same reason. Investing can be a lot of fun if you approach it correctly as you're doing.

[@daniuskac1527]

@@Nanalyze Joe, When you look at some big hedge funds losing money with FTX where they went against all the fundamental principles of investing. In my new portfolio, I am keeping it simple by buying reputable companies with real businesses. The safer and long term approach should be an ETF strategy, but I am not considering this for now. One stock after APD that I am considering buying now is MDT to match it with JNJ for the healthcare sectors. The way that you approach anything in this life is key, and investing is not an exception at this rule.

[@Nanalyze]

@@daniuskac1527 Absolutely correct on establishing principles and sticking to them in life and investing. For example, a strong work ethic will always provide benefits no matter how menial a job is. Medtronic is a solid medical device company and their yield is hitting all time highs it seems.

[@meNtor890]

How come you buy CrowdStrike as it's still unprofitable? Great video. I like your channel.

[@Nanalyze]

Glad you liked the piece! In our tech portfolio, revenue growth is a proxy for market share captured and one of the most important metrics we watch. Profitability has come into focus in today's bear market which is why we also look at gross margin and runway.

[@absw6129]

Great video. I have a question though: What are your thoughts on valuing these companies, not based on ratios, but by adding up expected future cash flows (and discounting them)? Intuitively, this just seems to make more sense to me, as what we ultimately want the company to do, is to generate profits which they can then give back to their shareholders. Using ratios, whether it be svr or P/S, just seems a bit arbitrary.

[@joepiv]

Great question. Most retail investors are in no position to be throwing together spreadsheets with future cash flows and discounting them (along with a sensitivity analysis on key variables). We keep things extremely simple. Everyone can understand what revenues are and what a market cap is. It's a very simple ratio that investors can use to gauge relative valuation, or set targets for stocks they're looking to purchase (as we often do). Also note that using traditional P/E ratios for most growth companies doesn't make sense because most aren't profitable yet (this is different from businesses that have negative GROSS margins which we stay far away from). We adhere to the KISS principle as much as possible here at Nanalyze.

[@Nanalyze]

Not sure why we didn't respond to this one year ago and are only seeing this now :) Valuing companies can get extremely complicated in a hurry and we always try to keep things simple. That being said, for all investors it's important that the phrase "a stock is valued based on the present value of future cash flows" become intuitive.

[@soundslight7754]

Excellent presentation Joe, thanks for sharing. Have you looked at their competitor SentinelOne? It seems to have a better growth every quarter in the last year or so and might still have better upside potential.

[@Nanalyze]

Yes, we took a look at them in this piece (www.nanalyze.com/2021/06/sentinelone-stock-vs-darktrace-stock/). We'll always opt for leaders in a space which is why we'd prefer CrowdStrike over SentinelOne. Good question.

[@kashganja]

@@Nanalyze isnt zscaler also taking the space?

[@Nanalyze]

@@kashganja We haven't done a deep dive on Zscaler so we're not aware of how they're positioned against Crowdstrike. Don't see them on Gartner's endpoint quadrant which raises questions. Looks like we'll have to follow up with a piece on Zscaler then. That said, we would likely prefer Crowdstrike given their size and leadership position based on analysis conducted thus far. Good comment, thank you.

[@MikeLikesComputers]

@@kashganja I had the same question. An observation from someone who works in the industry is that the capability overlap between Zscaler and Crowdstrike is very little. My understanding is that it is very common for customers to acquire both technologies and configure their respective integrations. It seems like there are youtube videos that showcase the two technologies working together.

[@joepiv]

@@MikeLikesComputers Delayed response, but we ended up doing a video on this. kzbin.info/www/bejne/f5empnadrNR5las