CrowdStrike Stock Plunges: What's Behind the Drop?

CrowdStrike (CRWD) shares have taken a nosedive in recent trading sessions, with the stock falling more than 11% on Wednesday, March 7, 2023. The cybersecurity company's stock price decline can be attributed to a mix of factors, including missed earnings guidance, macroeconomic concerns, and an investigation into a deal with Carahsoft. Let's dive into the details to understand why CrowdStrike's stock is plummeting today.



Missed Earnings Guidance

CrowdStrike's full-year earnings forecast fell significantly short of analyst expectations, leading to a sharp decline in the company's stock price. The company projected adjusted net income of $851.2 million to $883 million or $3.33 to $3.45 per share in fiscal 2026, well below the analyst consensus of $1.1 billion, or $4.23 per share, compiled by Visible Alpha. This disappointing guidance overshadowed the company's otherwise solid fourth-quarter results.

Mixed Quarterly Results

While CrowdStrike surpassed revenue and annual recurring revenue (ARR) estimates, the company posted a net loss and lower-than-expected earnings. The company reported a net loss of $92.3 billion, or 37 cents per share, contrasting with the net income of $53.7 million, or 22 cents per share, reported in the same period last year. This mixed picture created uncertainty among investors.

Macroeconomic Concerns

In addition to the company-specific factors, CrowdStrike's stock also took a hit due to broader macroeconomic concerns. Growth stocks, including CrowdStrike, experienced significant pullbacks on Friday, March 3, 2023, amid a new round of bearish macroeconomic data, such as declining consumer sentiment and manufacturing PMI scores.

Investigation into Carahsoft Deal

A Bloomberg report stating that the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) were looking into CrowdStrike's deal with Carahsoft also contributed to the stock's decline. Investors are concerned that the company could face potential risks related to this investigation, such as a hit on previously booked or anticipated sales.



In conclusion, CrowdStrike's stock price decline can be attributed to a combination of missed earnings guidance, macroeconomic concerns, and an investigation into a deal with Carahsoft. Investors should carefully consider these factors and monitor the company's future developments to make informed investment decisions. As always, it's essential to do thorough research and consult with a financial advisor before making any investment decisions.