After NVDA & AVGO, CRWD stock split next ?
Sample of how a share certificate used to look like
Stock Take on Stock Splits.
Is stock splitting in fashion?
Since 2024 began, more than a half-dozen high-flying businesses with well-defined competitive advantages have conducted forward-stock splits.
Companies that have split so far:
Completed.
Walmart (WMT) : 3-for-1 stock split. Jan 2024.
Cooper Companies (COO): 4-for-1 stock split. Feb 2024.
Texas Pacific Land (TPL): 3-for-1 stock split. Mar 2024.
Old Dominion Freight Line (ODFL): 2-for-1 stock split. Mar 2024.
Nvidia (NVDA) : 10-for-1 stock split. Jun 2024.
Amphenol (APH) : 2-for-1 stock split. Jun 2024.
Impending.
Chipotle Mexican Grill (CMG) : 50-for-1 stock split. Jun 2024.
United States Lime & Minerals (USLM): 5-for-1 stock split. Jul 2024.
Broadcom (AVGO): 10-for-1 split. Jul 2024.
So far, AI-Chip leader, Nvidia’s stock split is the most high-profile of the lot.
Why? It’s because it's graphics processing units (GPUs) have became the standard in AI-accelerated data centers, fueling a +700% increase in the company's share price since 2023 began.
With demand for Nvidia's H100 GPUs handily outpacing supply, Nvidia has had no trouble raising the price of these units.
In the process, increasing its gross margin to an eye-popping 78.35% in the fiscal first quarter (ended 28 Apr 2024).
In other words, splitting its stock for a second time since July 2021 was a no-brainer decision for Nvidia's board. (see below)
Since Nvidia started trading from Mon, 10 Jun 2024 based on new stock-split price, it has added a whooping +12.98% to its stock price.
Demand for its semiconductor chips seemed unwavering !
However, Nvidia is not the only fast-paced stock to complete a split in 2024.
Hot on the heels of Nvidia stock split is another high profiler $Broadcom(AVGO)$ who officially announced it during its quarterly earnings reporting on 13 Jun 2024. (see above)
Just before the official announcement, I had shared a detailed post about Broadcom’s possible split. Click here ! to read about it (and give a like okie).
Potential Companies heading for Splitville ?
Other logical candidates poised to become Wall Street's next stock-split stock, include $Costco(COST)$ and $Meta Platforms, Inc.(META)$.
However, there is one rapidly growing dark horse candidates that may be likeliest to follow in Nvidia and Broadcom's footsteps.
It is none other than $CrowdStrike Holdings, Inc.(CRWD)$ (see above)
What is CrowdStrike?
CrowdStrike Holdings, Inc. is an American cybersecurity technology company.
It provides cloud workload and endpoint security, threat intelligence, and cyberattack response services.
The company has been involved in investigations of several high-profile cyberattacks, including:
2014 Sony Pictures hack.
2015–16 cyber attacks on the Democratic National Committee (DNC).
2016 email leak involving the DNC.
For info: Just so you know,
Cybersecurity is one of the Top 5 Tech trends in 2024, as highlighted by Forbes. (see above)
And it is here to stay, giving the “aggressive” push for cloud-computing growth.
CrowdStrike Holdings
It is the first hypergrowth stock that could surprise Wall Street and become the next stock to perform a forward split.
For a start, CRWD has never conducted a stock split.
Recently on 07 Jun 2024, its shares have spiked to nearly $370 , after it was announced that CRWD will be added to the benchmark S&P 500 index. (see below)
Since its initial public offering (IPO) in 2019 at an IPO-price of $34 per share, CrowdStrike has returned more than +500% for its shareholders. (see above)
This is a reflection of changing variables in the Cybersecurity space, as well as CRWD’s unique innovation and superior platform.
Cybersecurity solutions have evolved from optional to necessary.
Businesses with an online or cloud-based presence are increasingly relying on third-party cybersecurity companies to fight back against hackers and robots that:
Do not take any time off.
Do not care how well or poorly the US and global economy are performing.
Sales Forecasts.
According to CrowdStrike, its total addressable market is expected to more than double from $100 billion in 2024 to $225 billion by 2028.
The secret sauce that's made CrowdStrike such a success is its cloud-native, AI- and machine learning-driven platform known as Falcon.
Every week, Falcon is overseeing trillions of events and becoming progressively smarter when it comes to identifying and responding to potential threats.
Vantage Point.
(1) What's particularly noteworthy about CrowdStrike is its retention rate.
CrowdStrike's software-as-a-service (SaaS) solutions are not anywhere close to the cheapest on the market.
Yet its retention rate has consistently hovered around 98%.
Businesses have demonstrated a willingness to pay more for a premium product, that CrowdStrike offers, when weighting:
The criticality of having a “well-protected” platform that ensures business continuity. — versus —
All repercussions associated with being penetrated by attackers.
(2) In addition, CrowdStrike is reaping the rewards of add-on sales.
As of end of company's fiscal Q1 2024 (30 Apr 2024), 65% of its clients had purchased at least five cloud modules:
Its SaaS model delivered an 80% adjusted subscription gross margin in fiscal 2024 (ended in late January).
Suggesting CrowdStrike's supercharged sales & earnings growth rates are sustainable.
Financials - At a glance.
CrowdStrike’s financial position is healthy. (see above)
It ended fiscal 2024 with around $3.5 billion in cash and liquid investments.
Although it carries around $740 million debt on its balance sheet, (a) the firm’s cash reserves and (b) its ability to generate healthy cash flow from its business — will be sufficient to cover its commitments over explicit forecast.
Do not expect to see a material change in CrowdStrike’s capital structure.
Morningstar’s Analysis:
CrowdStrike’s valuation is stretched.
It’s the most expensive software business in the world, with a higher enterprise value over the next 12 months than any other company.
It does not have any room for error.
Over the last year or so, the security space has bifurcated.
CrowdStrike and Palo Alto Networks (PANW) have emerged as clear favorites.
However based on the latest quarterly earnings, CrowdStrike topped expectations while Palo Alto continued to fall short of Wall Street’s consensus.
Final Gift
One last compelling reason why CWRD is a “Buy”.
Come next Mon, 24 Jun 2024, this stock is set to join the revised S&P 500 Index.
Along with $KKR & Co LP(KKR)$ and $GoDaddy(GDDY)$ .
Is there anything not to like about this stock?
If investors think CrowdStrike will be a massive security winner, they may want to own the stock (now?) even when it’s trading at 20x sales.?
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Modify on 2024-06-28 17:13
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