CrowdStrike Plunges 21% in 6 Months: Time to Hold or Fold the Stock?

CrowdStrike Holdings CRWD stock has been in a downward trajectory over the past six months. Shares of the company have plunged 21.2% over the past six months, underperforming the Zacks Computer and Technology sector’s decline of 9.5%.

CrowdStrike has also underperformed industry peers, including Fortinet FTNT and Okta Inc. OKTA, while marginally outperforming Palo Alto Networks PANW. Shares of Fortinet, Okta and Palo Alto Networks have lost 5%, 17% and 23.1%, respectively.

6-Month Price Return Performance

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This underperformance raises the question: Should investors cut their losses and exit, or is it worth holding CRWD stock?

CrowdStrike Encounters Slowing Sales Growth

Although CrowdStrike has experienced impressive growth since its IPO, recent quarterly reports have shown a deceleration in its growth rate. The company's revenue growth, while still robust, is not as explosive as in previous years.

CrowdStrike had enjoyed more than 35% year-over-year top-line growth till fiscal 2024. However, the growth rate decelerated to 29% in fiscal 2025 and further decelerated to 22% in fiscal 2026.

For fiscal 2027, CrowdStrike expects total revenues to be in the range of $5.868 billion to $5.928 billion, indicating a year-over-year increase of 22% to 23%. While the Zacks Consensus Estimate for fiscal 2027 revenues indicates a year-over-year increase of 23%, the same for fiscal 2028 suggests that the top-line growth will further decelerate to around 21%. This indicates that the deceleration in CrowdStrike's revenue growth is likely to continue in the upcoming years.

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CRWD’s Premium Valuation Warrants a Cautious Approach

CrowdStrike is currently trading at a high price-to-sales (P/S) multiple, far above the Zacks Security industry. CrowdStrike’s forward 12-month P/S ratio sits at 16.22X, significantly higher than the Zacks Security industry’s forward 12-month P/S ratio of 9.72X. The Zacks Value Score of F also suggests that CRWD stock is overvalued.

Forward 12 Month P/S Ratio

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CRWD stock also trades at a higher P/S multiple compared with other industry peers, including Fortinet, Okta and Palo Alto Networks. At present, Fortinet, Okta and Palo Alto Networks have P/S multiples of 7.79X, 4.31X and 10.37X, respectively.

Despite the above-mentioned challenges, it’s not all doom and gloom for CrowdStrike.

Falcon Flex Adoption Boosts CrowdStrike’s Subscription Gains

CrowdStrike’s subscription business model is driving its overall top-line performance. The company’s revenues crossed the $1 billion mark for the sixth consecutive time during the fourth quarter of fiscal 2026 and marked a year-over-year improvement of nearly 23%. This was partly achieved due to the strong adoption of the Falcon Flex Subscription Model, which allows customers to commit upfront and later choose modules, eliminating procurement friction.

CrowdStrike’s subscription customers, who adopted six or more cloud modules, represented 50% of the total subscription customers at the end of the second quarter. Those with seven or more cloud modules accounted for 34%, and those with eight or more cloud modules represented 24% as of Jan. 31, 2026. In the fourth quarter, Annual Recurring Revenues (ARR) from Falcon Flex customers reached $1.69 billion, rising more than 120% on a year-over-year basis. Management said Falcon Flex is now one of the most common ways customers choose to buy and expand on the Falcon platform.

Falcon Flex helps customers adopt new modules without long contract steps, which leads to faster platform usage. This is also driving strong re-Flex activity, where more than 380 customers expanded their Flex contracts in the fourth quarter. CrowdStrike added more than 350 Flex customers in the fourth quarter and ended fiscal 2026 with over 1,600 customers who have adopted Falcon Flex.

Falcon Flex helps customers adopt new modules without long contract steps, which leads to faster platform usage. This structure is leading to larger deals. Notable examples during the fourth quarter include a large enterprise software company. The customer initially started with CrowdStrike’s threat intelligence module, and is now using 25 different CrowdStrike modules after adopting the Falcon Flex model, committing to a total Falcon Flex contract value of $86 million.

If these patterns continue, Falcon Flex could remain one of CrowdStrike’s most important growth drivers through fiscal 2027 and beyond.

Conclusion: Hold CrowdStrike Stock Right Now

While CrowdStrike’s near-term growth may be slowing, its robust long-term potential remains compelling. The company’s subscription-based model and recurring revenue streams should provide stability and gradual growth, even amid ongoing macroeconomic challenges and geopolitical issues.

However, the company’s premium valuation and slowing sales growth warrant a cautious approach to the stock.

CrowdStrike currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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