Key Points
The cybersecurity specialist has been hitting on all cylinders.
However, the stock's current valuation is looking very frothy.
- 10 stocks we like better than CrowdStrike ›
While stock splits don't change a company's fundamentals, they can make shares more attractive to retail investors. With an accompanying lower stock price, splits can make it easier for investors to buy shares.
They also tend to create some excitement. In fact, ahead of its 4-for-1 split on July 2, CrowdStrike (NASDAQ: CRWD) shares rose six straight trading sessions, and rose in the session after its split as well.
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The question, though, is: Now that CrowdStrike has split its stock, does it look like a buy?
A market leader with strong momentum
When it comes to endpoint cybersecurity, CrowdStrike is widely considered the preeminent player in the space. Organizations use its Falcon platform to help protect their networks and their endpoints, such as smartphones and computers, from cyberattacks. For 2026, Gartner ranked it as the leader in endpoint security for the seventh straight year, with it being the top company in both its ability to execute and completeness of vision.
The company has been benefiting from the trend in cybersecurity of organizations looking to consolidate with one vendor to improve overall effectiveness and lower costs. As a result, its next-generation cybersecurity modules, such as Cloud Security, Identity Security, and Next-Gen SIEM (security information and event management), have been seeing strong traction. AI detection and response (AIDR) is also an emerging area of growth, with its annual recurring revenue (ARR) last quarter skyrocketing 250% sequentially and it having a pipeline of over $50 million.
One of the key parts of CrowdStrike's strategy has been the introduction of its Falcon Flex licensing model, which lets customers access its entire cybersecurity portfolio while only paying for the modules they use. This has helped increase module deployment while also giving it an ARR lift. The model has been a hit with customers, who have been expanding and re-Flexing into higher usage plans. Last quarter, the company said that the average Falcon Flex customer had more than $1 million ARR, and that it saw a 26% uplift when customers re-Flex.
Image source: The Motley Fool.
A high valuation
While CrowdStrike is a clear market leader with strong momentum, the one big knock on the stock is its valuation. The stock trades at a whopping forward price-to-sales (P/S) ratio of 32 and a forward P/E of over 150 based on analysts' estimates for its fiscal 2027 (ending January 2027). That's very expensive for a company that is growing its revenue in the low- to mid-20% range.
While I like CrowdStrike the company, the cybersecurity stock's valuation is just too rich for my blood.
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Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
