I'm Buying CrowdStrike Before Earnings As The Market Is Underestimating The Growth Story (Upgrade)

Summary

• Multiple channel checks point to higher-than-expected demand that consensus estimates don't seem to be pricing in. So I expect a revenue result and guidance beat in Q1 results.
• A 5% cut in headcounts can provide a 380bps margin tailwind., but stock-based compensation remains a key risk.
• CRWD is not cheap and there is some valuation risk. However, I am wary of avoiding a stock purely due to high valuations when the growth and margin momentum are accelerating.
• CRWD vs. SPX500 is breaking out to the upside on the monthly technical charts.
• A key risk monitorable is whether the margin benefits would be eaten up by stock-based compensation; a perennial concern I've had on CrowdStrike.

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Performance Assessment

CrowdStrike (NASDAQ:CRWD) has beaten the market since my last 'Neutral/Hold' update on the stock:

Thesis

CrowdStrike is reporting its Q1 FY26 earnings (it has a Jan-ending fiscal year) on 3rd June after-market hours. Ahead of

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in CRWD over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.