Should You Buy CrowdStrike Stock After Its Recent Pullback?

February 2nd, 2026 by Trefis Team
CRWD: CrowdStrike logo
CRWD
CrowdStrike

CrowdStrike stock (NASDAQ: CRWD) has retreated over 20% from its 52-week high of $566, now trading around $440. The culprits? Sky-high valuation concerns, broader cybersecurity sector weakness, and lingering financial aftershocks from a major 2024 service outage that’s still weighing on investor sentiment.

So is the dip a buying opportunity? Not really. While CrowdStrike’s fundamentals remain solid, the stock is simply too expensive. Even after the pullback, you’re paying a premium that’s difficult to justify from a risk-reward standpoint.

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How expensive are we talking? Very. CrowdStrike trades at a P/S ratio of 24.2 versus 3.3 for the S&P 500—over seven times more expensive per dollar of sales. The price-to-free cash flow ratio of 100.1 dwarfs the market’s 21.6. These aren’t small premiums.

But isn’t CrowdStrike growing much faster? Absolutely, and that’s the stock’s main argument. Revenue growth of 31.1% annually over three years crushes the S&P 500’s 5.6%. The most recent quarter showed 22.2% year-over-year growth. This is a company firing on all cylinders from a top-line perspective.

What about profitability? The numbers look terrible. Here’s where things get interesting. On a GAAP basis, CrowdStrike is unprofitable—posting an operating margin of -8.6% and a net margin of -6.9%. But those figures are misleading for a high-growth software company.

Why are GAAP numbers misleading here? Stock-based compensation. CrowdStrike expensed $865.4 million in SBC during fiscal 2025—a massive non-cash charge that tanks GAAP profitability. When you adjust for this and other items, the picture transforms completely.

So what do the adjusted numbers show? A profitable, efficient business. Adjusted operating margins hit 21%, adjusted net margins reach 20.4%, and free cash flow margins stand at 24%. The company just posted record Q3 free cash flow of $296 million. Subscription gross margins of 81% demonstrate incredible unit economics.

Are those margins sustainable? Management thinks they can go higher. CrowdStrike is targeting 28-32% adjusted operating margins and 34-38% free cash flow margins long-term. For fiscal 2026, they’ve raised guidance to $1.036-$1.040 billion in non-GAAP operating income.

What about the balance sheet? Rock solid. Just $818 million in debt against a $111 billion market cap gives a debt-to-equity ratio of 0.7%—essentially no leverage. Cash represents 48% of total assets. There’s zero financial stress here.

How has the stock handled market turbulence? Not bad, but still volatile. During the 2022 inflation shock, CRWD fell 68% versus 25% for the S&P 500—but it fully recovered by January 2024 and pushed to new highs. During COVID, it dropped 50% but bounced back within two months. The stock shows resilience over time, even if the ride is bumpy.

Let’s talk valuation again. What’s the real picture?
Even on adjusted earnings of $3.65 TTM, CrowdStrike trades at 120x earnings. Sales are expected to grow around 21% near-term, with margin expansion supporting faster earnings growth. But the forward P/E of roughly 90x is still extraordinarily high.

Could the market justify this premium? Possibly. Investors often pay up for companies with CrowdStrike’s combination of strong growth and expanding margins. Analyst price targets average $556, implying 25%+ upside from current levels. The market might be willing to sustain these multiples.  See, many professional investors ignore the P/E in favor of Free Cash Flow (FCF). Analysts are betting that CrowdStrike’s “platformization” will eventually produce massive, high-margin profits that the current P/E doesn’t capture.

Then why not buy it? Because even if the business performs well, you need the valuation to hold or expand—and that’s asking a lot at 90x forward earnings. If growth slows even modestly, or if the market rotates away from high-multiple stocks, downside risk is substantial. The 20% pullback barely dented the premium.

Bottom line? CrowdStrike is a high-quality business with exceptional growth, improving profitability, and a fortress balance sheet. But quality and value aren’t the same thing. At current prices, you’re paying for perfection. From a risk-reward perspective, CRWD stock remains expensive—even after the correction.

If you believe CrowdStrike can sustain 20%+ growth for years while margins keep expanding, and you’re comfortable with volatility, there’s a growth story here. But if you want a margin of safety, this isn’t it.

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