Should You Buy CrowdStrike Stock Before August 28?

CrowdStrike Holdings (NASDAQ: CRWD) CrowdStrike’s stock took a hit last month, losing nearly 40% of its value in July after it was revealed that the cybersecurity specialist’s faulty software update caused a massive outage. While CrowdStrike moved quickly to fix its mistake, negative press and threats of legal action appear to have largely prevented investors from buying the dip.

However, the fast-growing cybersecurity company is set to release its fiscal 2025 second-quarter earnings report (for the three months ended July 31) on August 28. Will the report be strong enough to trigger a turnaround? In other words, should investors consider buying CrowdStrike stock ahead of August 28 in hopes of better-than-expected results and guidance?

CrowdStrike’s upcoming results could reveal the extent of the damage it faces

The CrowdStrike incident that occurred on July 19 is estimated to have cost Fortune 500 companies $5.4 billion in losses. MicrosoftCloud-based computing systems have crashed around the world, while Delta Air Lines CrowdStrike will have to undertake a lengthy damage control exercise to regain customer trust, Wall Street analysts say.

As a result, CrowdStrike may be forced to offer its solutions at reduced prices, compensate customers who lost revenue due to the outage, or even offer them credits. Details of the true extent of the damage CrowdStrike may face should be evident in the earnings report.

It’s worth noting that CrowdStrike had previously forecast revenue of nearly $960 million for the fiscal second quarter (midpoint), an increase of 31% from the prior year. The company’s full-year revenue guidance is $3.99 billion, an increase of 30% from the prior year. However, analysts have slightly lowered their revenue estimates for fiscal 2025 and expect CrowdStrike to miss its full-year guidance. Their revenue estimates for fiscal 2026 and 2027 have been lowered further.

Adding to this uncertainty, the stock’s valuation isn’t exactly cheap.

The stock remains well valued despite the decline

CrowdStrike stock currently trades at 20.5 times its trailing price. That’s well above the U.S. tech sector average. price/sales ratio of 7.8. For a company coming out of a major incident that could negatively impact its balance sheet and growth for years, planning an investment in CrowdStrike before the earnings release is too risky a move.

Investors would be wise to stay away from this cybersecurity stock until the full extent of the damage it faces from the events of the past month becomes known on August 28.

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