If company insiders are confident in their particular business, it financially behooves them to hold onto their equity shares, which then raises a question mark for insider selling transactions impacting CrowdStrike (NASDAQ:CRWD). Specializing in endpoint security and threat intelligence, CRWD stock has fortuitously enjoyed powerful upside catalysts like the broader workplace dynamic shifts of the pandemic and more recently, the geopolitical flashpoint in eastern Europe.
At the same time, no equity unit rises higher in a perfectly linear fashion. Recently, CRWD stock generated some less-than-favorable headlines when a major insider sold almost $5 million worth of the security. To be fair, executives and other high-profile stakeholders sell their holdings for a variety of reasons. Also, the sale represented a relatively small portion of core holdings.
Nevertheless, it’s not the greatest optics for CRWD stock. As the underlying company is making a case for attracting more shareholder dollars, those closest to the business are cashing out their earlier positions. Rationally, if the business has a high potential for success, waiting for those shares to rise even more would be the ideal strategy.
Despite the obvious distraction, CRWD stock remains a buy because of the likely coming paradigm shift in the digital security architecture. According to Jefferies analyst Joseph Gallo — who assumed coverage of CrowdStrike at a “buy” with a price target of $275 — the company is a “category winner” that could sustain “sustain hyper growth for years.”
Per Gallo’s analysis, high enterprise renewal rates, impressive gross margin and a large addressable market bolster the bullish thesis. In addition to these points, it should be noted that Russia’s unsettling decision to invade Ukraine shows no sign of abating. The longer the conflict drags on, the likelier it is that U.S. and western forces will support Ukraine, exposing allied nations to cybersecurity risks.
Therefore, while insiders may be trimming their holdings of CRWD stock, the overwhelming narrative — that of high tensions in the escalating geopolitical arena — is bullishly compelling for CrowdStrike.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.