CRWD Stock Dips as Analysts Turn Bearish Before Earnings

CrowdStrike Holdings Inc. NASDAQ: CRWD is scheduled to report earnings after the market closes on June 3. Analyst sentiment has generally been bullish. That makes it noteworthy that one analyst firm, DZ Bank, issued a rare Strong Sell rating on the stock on May 23 with a price target of $370, a 20% drop from the stock’s price on May 28.

The downgrade is more startling because the analysts’ sentiment shifted from a Strong Buy to a Strong Sell. You would think that something catastrophic had happened with the company, as it did when a software upgrade glitch caused a massive outage in summer 2024.

But no, the sentiment here appears to be that CRWD stock is priced for perfection at a time when the company’s earnings are expected to be far from perfect.

CrowdStrike remains one of the top names in a growing sector, but its momentum may be stalling.

Why Is There So Much Interest in CrowdStrike Before Earnings?

Cybersecurity stocks will likely be one of the strongest growth sectors for the next five to ten years. The need for cybersecurity is likely to track the voracious growth of artificial intelligence (AI), which some analysts believe is still in the early innings of its growth.

CrowdStrike has been showing tremendous topline growth due to the popularity of its Falcon Platform. This platform allows customers to access multiple security features through one company, reducing the total cost of ownership.

However, the pace of revenue growth has been slowing. On one level, that’s understandable from a law of large numbers perspective. The company expects that its annual recurring revenue (ARR) will improve from the same quarter last year.

Another understandable but complicating factor in CrowdStrike’s revenue growth is that it’s made significant investments in the business.

That is weighing on the company’s operating margins, which are expected to drop from 22% in fiscal year 2024 to around 20% in fiscal year 2026. 

That may not seem like much, but the company’s stated operating margin goal is between 28% and 32%.

Traders Are Sending Short-Term Bearish Signals

One way to analyze a downgrade like the kind that CrowdStrike received is to look at the options chain. Unlike long-term investors who generally ignore earnings season noise, traders are always looking for any way to get an edge. In the case of CRWD stock, short-term sentiment is leaning bearish.

For the options expiring on June 6, the Friday after CrowdStrike reports earnings, the highest volume is for Put options with a strike price of $415.

That’s about 10% below the company’s stock price on May 28. That would take the stock down to a low of around May 15, which spurred the latest rally.

That price is also above the analysts’ consensus target of $404.43. However, the second-highest volume of Put options has a strike price of $400. Simply put, many traders are shorting CRWD stock before earnings.

Long-Term Investors Should Welcome a Dip

CrowdStrike is not only one of the best-performing cybersecurity stocks in 2025, but also one of the best-performing technology stocks. In fact, CRWD stock is up 36% in 2025, which puts it on par with the growth in gold year-to-date.

CRWD stock just made a new all-time high (ATH), and earnings are coming up on June 3. On the one hand, that’s a sign that investors are bullish on their expectations for the company’s results. On the other hand, it sets the stock up for a steep sell-off if the results (or guidance) don’t match expectations.

However, looking at longer-dated options, Calls outnumber Puts for September 19, 2025. The highest volume Calls have strike prices of $480 and $560 respectively.

That suggests that traders believe there will be a rally in the stock when economic conditions become clearer.

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