Key Points
On July 2, cybersecurity leader CrowdStrike (NASDAQ: CRWD) underwent a 4-for-1 stock split, reducing its share price to $193. The day before, the stock closed around $773 per share, and each stockholder of record received four shares for each share they held.
The price rose after the split took effect, up about 2% to $196 during the trading day. That’s not unusual — splits generally result in the stock price popping, both before and shortly after the split.
Since the split was announced on June 3, CrowdStrike’s stock is up about 8%. This is because investors wanted to buy in to get the split, and they anticipate it getting a lift from its new, more accessible stock price.
But does it really change anything for the stock beyond this short-term spike?
CrowdStrike stock is not cheap
The stock has had a good year, up about 66% year to date on a split-adjusted basis.
It has been fueled by excellent performance. In the latest quarter, revenue rose 26% to $1.39 billion, and CrowdStrike posted net income of $28 million, up from a $104 million loss the same quarter a year ago. Its net new annual recurring revenue (ARR) jumped 32%, and it posted record free cash flow.
Management raised its revenue and earnings guidance for fiscal 2027 and lifted its outlook for net new ARR by 520 basis points.
The company has great momentum, and the stock split should make it more accessible to more investors who can now more easily buy full shares.
But the concern is its valuation. CrowdStrike has a sky-high price-to-earnings ratio (P/E) of 401 but a more reasonable forward P/E of 39. I do think the stock is a buy, but it might be wise to wait for the split spike to subside and buy at a lower price.
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Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike. The Motley Fool has a disclosure policy.
