CrowdStrike Earnings Preview: A Make or Break Report After a Global Outage
CrowdStrike Earnings Preview: A Make or Break Report After a Global Outage
CRWD has a lot of work to put in and remains in a technically vulnerable position resulting from the July sell-off
CrowdStrike reports earnings on Aug. 28, after the market close.
Analysts expect earnings per share of $0.97 on $958 million in revenue for the quarter ending July.
Can the company recover from last month’s global outage that tanked the stock price?
CrowdStrike (CRWD) is set to report quarterly fiscal earnings after the market closes on Aug. 28.
Analysts expect earnings per share (EPS) of $0.97 on $958 million in revenue for the quarter ending July 31, according to Yahoo Finance.
CrowdStrike has beaten EPS estimates in four of the last four earnings reports. The current average analyst price target is 338.78, which is about 27% above the stock price of 267.55 traded on Aug. 20.
Can CrowdStrike recover from the July selloff?
CRWD is up only about 4% this year after an outage linked to the cloud security company caused problems for airlines, retailers and other businesses around the world. The outages resulted in billions of dollars of lost revenue.
The outage brings the threat of litigation and possibly millions of dollars in legal fees. Delta Air Lines (DAL) has threatened to sue after it said the outage cost the carrier about $500 million.
If anything can bring confidence back for CrowdStrike investors, this earnings call would be the opportunity for its executives to make a case for the company.
However, there will likely be some not-so-pleasant news to discuss following the massive outage. The path forward, as usual, will be key for the stock price over the next couple of months.
CRWD technical outlook
CRWD is barely higher this year despite a strong start to the year. However, prices managed to rally 30% off its early August lows, moving from 200.81 on Aug. 5 to 266.53 on Aug. 20.
Prices are trading above the 9-, 12- and 21-day exponential moving averages (EMAs), an encouraging sign for continued strength in the move from the August low.
Still, CRWD has a lot of work to put in and remains in a technically vulnerable position resulting from the July sell-off. Prices are trading below all key simple moving averages (SMAs), including 50-, 100- and 200-day simple moving averages (SMAs).
The implied move for earnings is +/- 27.78 points, per the Aug. 30 options expiration. That represents 10.4% of the current stock price, putting it toward the higher end of the range for expected earnings moves. That said, options traders may want to employ a premium selling strategy that aligns with their risk profile and directional assumptions.
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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