To The Moon

$CrowdStrike Holdings, Inc.(CRWD)$

CrowdStrike stock dropped more than 6% in after-hours trading on Thursday, June 3rd, following the company’s fiscal Q1 2026 earnings release. But before jumping to conclusions, it’s important to zoom out and look at the bigger picture.

Even after this drop, CrowdStrike shares are still up more than 42% year-to-date in 2025. That’s a massive run-up for any stock in less than half a year. So while the decline grabbed headlines, it may simply be a healthy retracement—a natural pause after an aggressive rally.

In today’s analysis, I’ll walk you through the company’s latest earnings release, break down what I believe are the most important metrics to focus on, and give you an updated valuation for CrowdStrike. By the end, I’ll let you know whether I currently rate the stock as a buy, hold, or sell.

CrowdStrike’s Q1: Big Wins in Customer Retention and Deal Momentum

CrowdStrike management opened the earnings call by highlighting strong performance in several key areas:

• A record number of large deals signed in the quarter

• 97% gross retention, which shows how sticky their product is

• Continued strong net retention, which accounts for expansion from existing customers

Retention is a key metric I focus on in my six-step investing framework, which I break down in detail in my new book (link in the description). Why? Because retention directly reflects the value customers place on the product—and thus, the strength of the company’s long-term growth engine.

If net retention falls below 100%, it means customers are cutting back spending. That’s a red flag. CrowdStrike’s ability to consistently stay above 100% net retention is a sign that their platform continues to deliver value and expand within client organizations.

Annual Recurring Revenue (ARR) Beats Expectations

The company reported net new ARR growth and bottom-line results that beat internal expectations. They also generated record operating cash flow of $384 million, which matches their year-ago Q1 figure.

That consistency is impressive, but here’s where I’ll add a note of caution: When a company grows revenue by 20%, I like to see cash flow growth that exceeds that, reflecting improving operating leverage. That didn’t happen this quarter. While cash flow remained strong, it was flat year-over-year despite a $180 million increase in revenue.

Part of the reason: elevated expenses, particularly in customer support and retention efforts, following the major service outage more than a year ago. That outage had long-lasting reputational effects, and CrowdStrike has had to invest heavily to retain customer trust and satisfaction.

CrowdStrike’s Topline Is Still Outpacing the Industry

Revenue for the quarter came in at $1.1 billion, up 20% year-over-year, which is slightly ahead of the average cybersecurity industry growth rate. That’s a positive sign, because it suggests CrowdStrike is not only growing—it’s gaining market share.

And that’s important, because cybersecurity is one of the sectors I’m most bullish on over the next 5 to 10 years.

Cyberattacks are only growing more complex and costly, and enterprises continue to shift security budgets toward cloud-native solutions like CrowdStrike’s Falcon platform. I believe the total addressable market (TAM) for cybersecurity is massive, and still expanding—particularly as AI introduces new threat vectors.

At some point, yes, I believe cybersecurity could become commoditized. As more vendors offer similar baseline protection, it will get harder to maintain pricing power or differentiation. But we’re not there yet. Today, enterprises still perceive meaningful differences between platforms like CrowdStrike, Palo Alto Networks, and Zscaler, giving leading players the ability to command premium prices and defend margins.

Profitability Takes a Hit Amid Higher Costs

However, the quarter wasn’t without its red flags.

CrowdStrike reported a loss from operations of $125 million, a stark contrast to the $6.9 million profit in the same quarter last year. As I mentioned, much of this relates to increased costs associated with:

• Customer support from last year’s service outages

• Higher sales and marketing spend to drive growth

• Ongoing R&D to maintain platform leadership

While some of these expenses are temporary, it’s a reminder that scaling profitably in a competitive, high-growth sector isn’t always smooth.

Share Buybacks Approved – A Vote of Confidence?

One encouraging move: the Board of Directors approved a $1 billion share repurchase program.

Now, not all buybacks are created equal. Sometimes companies repurchase shares simply because they have no better use for excess cash. But in this case, I take it as a signal of confidence. Management believes the stock is undervalued relative to its long-term prospects—and is putting capital behind that belief.

Still, given the current valuation, this move raised eyebrows.

Fiscal 2026 Guidance – The Real Reason for the Pullback?

So, if the quarter had so many positives, why did the stock fall?

It likely comes down to guidance.

CrowdStrike is projecting fiscal 2026 revenue of $4.75 to $4.8 billion, with non-GAAP operating income around $1 billion. That’s still robust growth and healthy margins. But after a 40%+ year-to-date rally, the bar was simply set too high.

Expectations were priced for perfection, and the guidance—while solid—wasn’t spectacular enough to justify a forward P/E north of 140.

And here’s where I think many investors missed the forest for the trees…

Valuation: The Elephant in the Room

Let’s talk valuation, because this is the core reason I’ve had CrowdStrike rated as a Hold, and why I’m maintaining that rating today.

As of the time of this analysis, CrowdStrike is trading at a forward price-to-earnings ratio of 141. That’s roughly seven times the S&P 500 average.

Yes, it’s a premium business. Yes, the company has excellent fundamentals, including:

• A 35% operating cash flow margin

• A net retention rate consistently above 120%

• An industry-leading platform with expanding customer adoption

But even great companies can be poor investments if you overpay.

Using my proprietary discounted cash flow (DCF) model, I arrived at an intrinsic value of $189 per share. That’s well below the current trading price of $489—and even if we give CrowdStrike a generous growth premium, it’s tough to justify that price.

Also, while returns on invested capital (ROIC) are rising, they remain underwhelming at just 0.44%. That’s not high enough yet to signal long-term economic profit.

When you combine:

• A premium valuation

• Slowing margin expansion

• Flat cash flow growth

...you get a setup where even good news isn’t enough to drive the stock higher. That’s the definition of priced for perfection.

Final Thoughts – Hold Rating Reaffirmed

The last time I updated my CrowdStrike rating was on May 1st, and I rated the stock as a Hold. Since then, it’s rallied over 40%, and frankly—I missed that move.

But here’s the thing: discipline matters.

Sticking to a valuation framework helps investors avoid chasing momentum and overpaying in the long run. While the market ignored the rich valuation and bid prices higher this year, I believe valuation always matters eventually.

So even after this latest earnings release, I’m reaffirming my Hold rating on CrowdStrike.

It’s a great business—just not at a great price.

Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.

@Daily_Discussion @TigerPM @TigerObserver @Tiger_comments @TigerClub