CRWD - Embedded Expectations Analysis - 2021 05 12
CrowdStrike Holdings, Inc. (CRWD:USA) currently trades at a historical high relative to UAFRS-based (Uniform) assets, with a 38.1x Uniform P/B. At these levels, the market is pricing in expectations for profitability to inflect positively, but management may have concerns about their Preempt Security and Humio acquisitions, ARR growth, and their Ernst & Young (EY) allianceSpecifically, management may lack confidence in their ability to strengthen the security efficacy of their solutions, leverage tailwinds from the recent SUNBURST hack, and sustain ARR growth, especially in the cloud workload protection area. Moreover, they may have concerns about the pace of their customer security deployment schedules as well as the potential of their Preempt Security and Humio acquisitions. In addition, management may lack confidence in their ability to aggressively invest in sales and marketing efforts and secure larger deals, particularly through their new alliance with EY
CrowdStrike is a holding company. Through its subsidiaries, the company provides a cloud-delivered solution for next-generation endpoint protection that offers 10 cloud modules on its Falcon platform via a SaaS subscription-based model that spans multiple large security markets, including endpoint security, security and IT operations (including vulnerability management), and threat intelligence. The company conducts its business in the United States, as well as locations internationally, including in Australia, Germany, India, Romania, and the United Kingdom.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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