Crowdstrike (NASDAQ:CRWD) will enter the S&P 500 on June 21 after the index is rebalanced. The cybersecurity company is entering the index alongside KKR (NYSE:KKR) and GoDaddy (NYSE:GDDY) as part of the quarterly update.
CRWD stock is up more than 7% on the news as of this writing. Shares opened today $368 per share today. Crowdstrike currently has a market capitalization of $92 billion.
Shuffling the Deck
Crowdstrike will be added to the S&P ahead of Dell Technologies (NYSE:DELL) and Palantir (NYSE:PLTR), which fell on the news. Dell is up more than 75% so far this year while Palantir is up 38% in 2024. CRWD stock is up more than 50% year-to-date (YTD).
When the S&P adds companies to a bigger index, funds tied to the index buy the stock. When a stock is taken down from an index, however, investors sell shares. Crowdstrike is replacing the Dallas-based banking company Comerica (NYSE:CMA) on the index.
Crowdstrike recently beat analyst estimates on earnings. Quarterly net income jumped to $42.8 million, or 17 cents per share fully diluted, on revenue of $921 million. Investors had been selling ahead of earnings and were caught offside.
Crowdstrike has been drawing praise from customers for its Falcon security platform, combining protection for endpoints, identity and cloud. The company recently added insurability to the platform, allowing insurance companies to fast track customers for cyber insurance.
Crowdstrike currently has about 24% of the endpoint security market. It has continued to take share from legacy companies like Microsoft (NASDAQ:MSFT) and Cisco (NASDAQ:CSCO) in cloud security.
CRWD stock is a big favorite at TipRanks, where all 31 analysts with coverage have buy ratings. TipRanks shows an average price target of $399.96 for CRWD. Traders on Stocktwits also appear bullish on the name.
What Happens Next?
Cybersecurity is hot right now. But many of the valuations of these companies look stretched, including Crowdstrike.
On the date of publication, Dana Blankenhorn held a LONG position in MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
