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On 19 July 2024 – a year ago tomorrow – the world experienced a huge IT outage. The culprit was cybersecurity firm CrowdStrike (NASDAQ: CRWD), whose software update sent IT systems globally into meltdown. At the time, the outage sent CrowdStrike’s share price into meltdown too.
But how has the S&P 500 stock done since? Let’s take a look.
A strong recovery
In the lead up to last year’s IT outage, the growth stock had been hot. Between the start of 2024 and 19 July, it surged from around $255 to $305. When it became apparent that the cybersecurity company was behind the outage however, the share price fell significantly. At one point, the stock was trading close to $200.
Fast forward to today, and CrowdStrike is now trading near $470. So it’s up about 55% from its pre-outage levels and around 135% from its lows. In other words, it has made a strong recovery. Today, those dark days of 2024 are a distant moment.
Multiple drivers
Why has the stock made such a powerful recovery? A few reasons. For starters, CrowdStrike’s revenue growth has continued to be impressive. Cybersecurity spending is an essential for businesses today and this is reflected in the company’s recent earnings – last quarter (ended 30 April), it reported top-line growth of 20%.
Secondly, customer retention has been high. In the quarter after the outage, it was 97% (it was 97% last quarter too).
Third, immediately after the outage, CrowdStrike made several moves to help customers restore their systems and improve its own resilience. This really helped sentiment towards the company and the stock.
It’s also worth noting that the software and cybersecurity sectors have been quite hot for a lot of the last year as have artificial intelligence (AI) stocks. This momentum has no doubt helped.
I bought in October
I’ll point out that I spotted the high level of customer retention and continued strong revenue growth in October last year. As a result, I added the stock to my portfolio when it was trading at around $308.
That move paid off. Since I got in, it has risen more than 50%, which is an excellent gain in such a short period.
Worth a look today?
Is the stock worth considering now? I think so, especially on pullbacks (it’s actually experiencing a decent one right now).
We can’t rule out further IT outages. And we definitely can’t rule out further share price volatility (that’s the price of admission with this high-flying growth stock).
But taking a five-year view, I expect this stock to do well. Today, its market-cap is only around $115bn. I think it can get much bigger as the world becomes more digital and cyber threats (and counter-measures) become more sophisticated.
