I am assigning CrowdStrike Holdings (NASDAQ:CRWD) a negative risk/reward rating based on its extreme valuation, rapidly decelerating sales growth, and indications of intensifying competition and pricing pressure. Budding growth deceleration combined with CrowdStrike’s extraordinary valuation at 46x estimated sales manifest as an acute risk of multiple compression. The potential multiple compression is substantial and on a scale that is unusual from a historical market context. As a result, the shares offer an exceedingly negative risk/reward asymmetry.
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