Editor’s Note: this article was updated on Aug. 24, 2020, to correct a ticker.
The novel coronavirus pandemic has forced businesses and organizations to embrace the internet. Many had remote workers, but with employees suddenly working from home en masse, the internet was thrust into the spotlight. That introduced a flood of security concerns, turning the pandemic into a huge opportunity for online security companies. Crowdstrike (NASDAQ:CRWD) is a perfect example. After slumping in 2019, CRWD stock is up 119% so far in 2020.
The California-based company only went public in 2019, and after some initial excitement saw its shares slide through 2019 and early 2020. Potential investors will want to weigh CRWD’s performance since March against those initial results. Is this year an anomaly, or will the demand for its cybersecurity services continue in a post-pandemic world?
Working From Home Introduces New Security Risks
Prior to the pandemic, many companies had employees who would work remotely – from a home office, or while traveling. But the common practice was to use corporate laptops and mobile devices that could be closely managed by IT.
With the pandemic, the situation changed. Millions of employees began working from home, often using their own PCs. They connected to the office using their own home wi-fi networks. Those firms and organizations that hadn’t previously embraced remote access were in an even tougher position, forced to to put solutions together rapidly.
The rapid shift to mass adoption of remote access brought a wave of concern about cybersecurity. With so much more critical data now flowing over the internet, and many of the devices not under the protective umbrella of an IT department, criminal activity was bound to increase.
A report from Checkpoint showed that 71% of security professionals observed an increased in attacks since the start of the pandemic.
Leveraging the Cloud and AI
Crowdstrike doesn’t have the consumer name brand recognition of NortonLifeLock’s (NASDAQ:NLOK) Norton Antivirus, but the company is positioning itself as being far beyond the capabilities of traditional cybersecurity software.
In particular, Crowdstrike solutions make heavy use of cloud-based artificial intelligence (AI). Traditional security products are reactive. As threats are discovered based on attacks against PCs, updates are pushed out to computers to help protect against them. Crowdstrike positions its solutions as employing proactive threat hunting. The AI and machine learning root out attack threats earlier, and take the measures to neutralize them before wide scale attacks begin.
Crowdstrike says its cybersecurity solutions are ideal for the pandemic, noting:
“…our cloud-delivered platform and lightweight agent architecture is ideally suited to supporting and specifically securing remote workers.”
The company claims some heavy-hitting enterprise customers, including 44 of the Fortune 100 companies, as well as many of the largest banks, health care providers and energy institutions.
Q1 Earnings Reflects Coronavirus Boost
At the start of June, Crowdstrike reported its first quarter fiscal 2021 earnings. The results reflected the boost the company is seeing from the pandemic and its work-from-home effect. Revenue of $178.1 million was up 85% year-over-year. Adjusted earnings were 2 cents a share compared to a loss of 47 cents a share at this time last year. Subscription customers increased 105%.
The company doesn’t see the boost in business fading any time soon. It increased its full-year revenue guidance to between $761.2 million and $772.6 million.
The results lifted CRWD stock, eventually pushing it to a new record close of $116.65 on July 10.
Bottom Line on CRWD Stock
When Crowdstrike held its IPO, shares went on sale at $34. At the worst of the market turmoil in March, CRWD dropped below $40, but it’s been a steady climb since then. By June it had eclipsed the $96 it hit at the height of its post-IPO frenzy last August.
Crowdstrike has benefited tremendously from the pandemic as companies rush to make their remote workforce secure. However, the work-from-home trend isn’t going to disappear once Covid-19 is under control. Big tech companies including Twitter (NASDAQ:TWTR) and Facebook (NASDAQ:FB) are allowing many of their employees to remain working from home on a permanent basis. This new normal is going to continue to drive demand for advanced cybersecurity solutions.
CRWD stock is near its record high close, but it has the momentum to go much higher. InvestorPlace contributor Will Ashworth lays out the case for this $110 stock being worth $150 or more. And you can’t argue with the potential for returns like that.
Brad Moon has been writing for InvestorPlace.com since 2012. He also writes about stocks for Kiplinger and has been a senior contributor focusing on consumer technology for Forbes since 2015. As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.