Crowdstrike Q3 - Volatility Is A Feature, Not A Bug

On Wednesday night, Crowdstrike, one of our 'future hero' stocks reported their latest numbers. The stock has had a very volatile year so far. It started the year at $200, dropped to $175, then soared to $298 and is now back at $209. Your view of the stock will be very different depending on when you bought it.

Why so much volatility? The market has very high expectations for the company, meaning that even small changes in sentiment has an outsized impact on the share price. Crowdstrike expects to have revenue of just above $1.4 billion next year and has a market cap of $50 billion, meaning it trades at 35 times sales!

Clearly the market expects a lot and for good reason. In the latest set of results, the company reported a 64% increase in revenue. This mega growth is expected to continue for years to come. Demonstrating Crowdstrike's market-leading position, the US Department of Homeland Security announced this week that Crowdstrike had been awarded a contract to assist in protecting government networks.

We are very bullish on this company, but it will be a bumpy ride while the industry matures.