CrowdStrike Holdings, Inc. (CRWD:NASDAQ)
Price at Preparation: $266.78 (August 19th, 2024)
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What they do
CrowdStrike Holdings, Inc. (CRWD:NASDAQ) is a global cybersecurity company that provides cloud-delivered protection of endpoints, cloud workloads, identity and data. Their Falcon platform is designed for cybersecurity consolidation, purpose-built to stop breaches. It collects and integrates data from across the enterprise, including endpoints, cloud workloads, identities, and third-party sources. The platform also leverages a single lightweight-agent architecture with integrated cloud modules spanning multiple security markets, including corporate workload security, managed security services, security and vulnerability management, information technology operations management, threat intelligence services, identity protection and log management. The Company offers twenty-seven cloud modules on its Falcon platform via a software-as-a-service (SaaS) subscription-based model that spans multiple large markets, including corporate endpoint and cloud workload security, and more.
Welcome to Theta Bandits Top Pick Tuesday. We strive to bring you relevant free content, searching markets and making plans to be ahead of what we think could be new potential winners in any portfolio. A note on today’s pick: this stock has an expensive price point, so trade within your risk tolerance limits.
Opinion
You might recognize the name CrowdStrike Holdings, Inc. (CRWD:NASDAQ) from the news in July 2024, where a software update had catastrophic consequences for many companies most notably the airline industry having to ground flights due to reservation systems being affected. This had a dramatic impact on the stock with having a daily decline of approximately 20% with more hurt to come with a total stock decline from just under $400 USD to a little over $200 USD in the span of about a month.
With such a decline why is this stock on the list you might ask?
As we have discussed previously with Earnings Reports (ER), CRWD is reporting next on August 28th, 2024. There is potential for the stock to run up in preparation for this ER as they rarely miss and in the past four quarters have consistently had a move to the upside on their ER. While this is not a guarantee, we would suggest it to be a more than favourable probability to repeat the same price movement.
The current street consensus has 40 Buys, 8 Holds, 3 Sells and the 12-month Price Targets (PT) as follows:
- Low: $185.00 USD (-30.65%)
- Average: $342.48 USD (+28.37%)
- High: $540.00 USD (+102.41%)
Plan
As usual, find the visual aid below with following colors:
- Blue: 52-week high.
- Red: 52-week low.
- Green: 12 Month PTs (avg / low).
- Orange: Support/resistance lines / info from previous ER.
- Purple: Showing software bug issue and price decline and gap to fill.
- Yellow: Our plan targets.
As mentioned at the start of this article, this stock is expensive and as always, we promote risk mitigation and keeping to your individual risk profile.
First let us have a look on the visual aid where around every ER where there is an orange circle and green vertical, notice in every instance there is a nice upward price movement. Second, let us look at the area marked in purple which shows a huge decline quickly and presents a “gap to fill” on recovery. After this move down, we can see the price trying to recover and to date has recovered approximately $66 USD. Finally, the next ER of August 28th, 2024, is shown with the light purple vertical line.
Typically, stock prices will move up as the run up to their ER date. Since we are on a tight timeline, we should have a tight stop loss set at one or at worst two support lines down of $259.96 USD or $247.78 USD and should cut the trade at that point. On the upside, either secure partial profit or stop-losses can be set and updated as we cross through the next resistance lines at $272.14, $286.97, $303.38 USD. After the $286.97 resistance line the stock will be firmly “in the gap” that could potentially be filled, which would put the stock at the 12-month average price target (PT) of $342.48 USD at the gap fill.
Finally, as we have mentioned in previous Top Pick Tuesdays around ER trades – The result of ER is a 50/50 coin-flip at best. We would encourage only profits or free money to be continued post ER as the volatility and risk involved is too great. After the results have come out, a re-entry to trade the reaction side of the ER could be a viable option.
This is only one way to attack this position. To learn about other methods of attack on a trade, sign up to attend our weekly Theta Bandits Webinar – When we trade together, we learn together!
RISKS
The goal is to grow capital by securing profits along the way and limiting losses. Make sure to plan to trade within your risk tolerance, allowing time for success while updating limits and exit points to mitigate risk.
If you’ve been finding our picks helpful, imagine what the live version holds. You know what to do 👇
Disclaimer: This article is for informational and educational purposes only, not investment advice. We recommend researching and consulting with a financial advisor before making investment decisions. All actions based on this information are at your own risk.
