CrowdStrike Holdings, Inc. (CRWD): A Bear Case Theory

We came across a bearish thesis on CrowdStrike Holdings, Inc. (CRWD) on Stock Whisperer’s Substack. In this article, we will summarize the bears’ thesis on CRWD. CrowdStrike Holdings, Inc. (CRWD)'s share was trading at $455.59 as of 23^rd May. CRWD’s trailing and forward P/E were 401.83 and 131.58 respectively according to Yahoo Finance.

CrowdStrike Holdings (CRWD), a prominent player in cybersecurity, is currently facing a confluence of technical, fundamental, and sentiment-driven headwinds that suggest potential near-term downside. While the stock had enjoyed an upward trend, recent technical indicators—including a bearish candlestick and declining trading volumes—signal a possible pullback. Despite the MACD showing positive momentum, the lack of volume conviction weakens the bullish case.

With resistance at $450 and support at $360, the stock appears range-bound and vulnerable to short-term volatility. On the fundamental side, CrowdStrike’s growth narrative remains intact, evidenced by a strong forward EPS of $4.27 and favorable analyst ratings. However, a lofty forward P/E of 96.15 and a negative trailing EPS of -$0.08 underscore high investor expectations that leave little room for error. Disappointment on any front could lead to a valuation reset.

Meanwhile, sentiment has soured due to internal and external pressures. A 5% workforce reduction has raised concerns about operational efficiency and growth trajectory, while regulatory scrutiny over a tech deal has added uncertainty to the governance outlook. Broader tech market volatility has only amplified these concerns, pushing risk-averse investors toward safer assets. A recent 5.1% decline in the stock reflects this cautious sentiment. Absent a clear near-term catalyst or resolution to these issues, the stock may continue to struggle. While the long-term story of innovation and market leadership remains intact, investors should approach CRWD with caution in the coming weeks, keeping a close eye on regulatory updates and macro-driven sentiment shifts that could alter the investment landscape.

Previously, we have covered CrowdStrike Holdings, Inc. (CRWD) in March 2025, wherein we summarized a bearish thesis by Magnus Ofstad on Substack. The author highlighted concerns over the company’s slowing growth and elevated valuation. Despite strong performance in AI-driven cybersecurity and a quick recovery from a mid-2024 IT outage caused by a faulty Falcon sensor update, the stock’s forward P/E of over 100 and decelerating revenue guidance for FY2025 raised red flags. With a fair value estimate of $270, the article argued that CRWD appeared significantly overvalued, posing risks for valuation-conscious investors. Since our last coverage, the stock is up 22% as of 27^th May.

CrowdStrike Holdings, Inc. (CRWD) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 64 hedge fund portfolios held CRWD at the end of the first quarter which was 77 in the previous quarter. While we acknowledge the risk and potential of CRWD as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CRWD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.