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Insight
published
2025-12-30

CRWD update 2025-12-08

Investment Update: CRWD

Date: 2025-12-08 Event Type: News

Executive Summary

CrowdStrike (CRWD) experienced mixed news recently. Federated Hermes Inc. reduced their stake in the company, while separate reports highlighted the company's accelerating growth and the strength of its AI-powered Falcon platform. The conflicting signals require careful analysis to determine the overall impact on the investment thesis.

Key Takeaways

  • Federated Hermes Reduced Stake: Federated Hermes Inc. sold 75,348 shares of CRWD, reducing their holding by 28.6% in the last quarter. This selling activity represents approximately 0.08% of CrowdStrike's outstanding shares. While notable, this could be due to portfolio rebalancing rather than a negative outlook on CrowdStrike itself.
  • AI-Powered Falcon Platform Strength: CrowdStrike's Falcon platform, powered by AI, is recognized as a comprehensive cybersecurity solution. The platform includes 32 modules covering various aspects of security, including cloud, identity, and endpoint protection, which positions it strongly in the market.
  • Accelerating ARR Growth: CrowdStrike's Annual Recurring Revenue (ARR) growth accelerated in fiscal Q3, reversing a previous trend of deceleration. This growth is attributed to the company's next-generation security offerings and the Falcon Flex consumption model, demonstrating improved sales execution and market adoption.

Thesis Impact

  • Status: Strengthened
  • Reasoning: While the sale by Federated Hermes is a point to note, the positive news regarding accelerating ARR growth and the continued validation of CrowdStrike's Falcon platform as a leading AI-powered cybersecurity solution outweigh this concern. The accelerating growth suggests increasing market demand and successful execution of CrowdStrike's strategy. The diversity of the Falcon platform with its 32 modules further entrenches CrowdStrike's position as a leader in the cybersecurity space. The increasing ARR growth is key as it shows the company is expanding its subscription base, signaling long-term revenue potential and stickiness with customers. The Falcon Flex solution provides greater flexibility for customers, enhancing adoption and ultimately driving growth.

Valuation Update

  • Previous Fair Value: $350
  • New Fair Value: $380
  • Current Price: $330

Action Plan

  • Decision: Buy
  • Rationale: The recent pullback potentially caused by the Federated Hermes sale provides an attractive entry point, given the company's accelerating ARR growth and the strength of its Falcon platform. The increase in fair value reflects the improved growth trajectory and market position. With the current price below the new fair value estimate, there is an opportunity for capital appreciation. The growth in AI in security only strengthens the position for CRWD.