Do not panic! Palo Alto’s loss is CrowdStrike’s gain!

$CrowdStrike Holdings, Inc.(CRWD)$ 

In my previous post on Tiger Broker about CrowdStrike (CRWD), CRWD’S share price was around $260. Since then, it has skyrocketed to over $310, representing a nearly 20% gain in less than two months! At one point, CRWD’s share price even hit above $330!

However, cybersecurity stocks, including CRWD and ZS, took a hit recently after Palo Alto Networks (PANW) issued lower-than-expected guidance and blamed "spending fatigue" in the industry. This pessimistic outlook caused CRWD and ZS shares to plummet over 10%, while PANW itself experienced a staggering 28% drop.

PANW is not the same league as CRWD!

Recent guidance from Palo Alto sparked concerns about a potential downturn in the cybersecurity sector. However, this outlook might not be universally applicable. It is crucial to avoid painting the entire industry with the same brush, and Palo Alto's guidance should not be extrapolated wholesale to other Security Software companies such as CRWD.

Although PANW's guidance cut initially suggests a downturn in Security Software demand, the impact on peers might not be as severe as the market assumed. With the exception of the cyclical Firewall business, demand remains robust, and PANW's go-to-market strategy is unlikely to cause significant pricing pressure for Next Gen Security. Moreover for CRWD’s case, Endpoint security is currently one of the most resilient areas of cybersecurity demand.

Also, it is important to note that the public sector weakness cited by Palo Alto is unique to itself. The difficulties that emerged last quarter were not experienced by CrowdStrike. In contrast, CrowdStrike highlighted strong public sector activity as a factor contributing to its favourable results.

Furthermore, if you listened to PANW’s earnings call, it was evident that the pricing pressure issues are primarily impacting PANW’s hardware and firewall-based segments. Cloudflare did not mention anything about pricing pressures affecting its network security business a couple of weeks ago during its earnings call, and I believe this is irrelevant for CrowdStrike.

In fact, CrowdStrike has gained market share by replacing several individual solutions with its comprehensive Falcon platform, offering customers a compelling value proposition. They have been particularly successful during macroeconomic challenges, as organizations seek to optimize their investments against cybersecurity threats. Their success in replacing legacy solutions from vendors like Microsoft, SentinelOne, and Palo Alto demonstrates their competitive edge and contributes to their continued market share growth.

Palo Alto also highlighted the importance of improving its managed breach remediation capabilities for customers. CrowdStrike, on the other hand, is already recognized for its comprehensive product suite that offers a strong advantage in remediation, particularly through its managed detection and response (MDR) service. CrowdStrike's MDR leverages several key elements, including a vast data set (Falcon Threat Graph) and highly skilled threat hunters, to expedite the cleanup process for clients. This area is crucial for Palo Alto's ongoing platform development, and based on industry assessments, CrowdStrike already holds a leadership position in this domain.

Conclusion

The aforementioned factors, including its comprehensive platform, strong market position, and technological leadership, suggest significant potential for CrowdStrike's future growth, scalability, and profitability. While recent developments at Palo Alto Networks may raise concerns within the cybersecurity industry, they do not significantly impact my positive assessment of CrowdStrike's long-term prospects.

However, it is worth noting that CrowdStrike’s valuation is considered to be very expensive now, so please invest with caution!

@TigerStars @Daily_Discussion @MillionaireTiger 

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  • finde
    ·02-26
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