News and analysis

CrowdStrike is among the most disputed stocks on Wall Street since its faulty software update on July 19, 2024 has been responsible for the largest global outage in history, affecting millions of Windows-based devices, transactions and cloud services, check-in systems at airports etc. The cybersecurity giant lost nearly half of its market value during the next couple of weeks following the incident, which was equivalent to about $50 billion. CrowdStrike withstood a backstabbing blow conducted by its own program code bugs, however. Its shares managed to recover 88% of the one-off price damage to touch a $375 barrier this Monday, November 25, just one day and one night before the firm's Q3 earnings. Apparently, a rehabilitation period is progressing normally, as the stock initially fell only 3% to 6% in after-hours following the release and then kept within this frame of losses when the regular trading resumed on Wednesday. This looks like a worthy answer in the given circumstances. Going back to fundamentals, CrowdStrike's financial performance consists of a 32% increase in its annual recurring revenue (ARR) which came out at $3.86 billion to exceed its inner preliminary guidance by a total of $0.964 billion. The firm's agreeable commitment to transparency and customer trust helps a lot, so that the company's long-term goal of reaching $10 billion in ARR by the fiscal year of 2031 could be a rather realistic and potentially achievable business targeting. Particularly for the recent quarter, CrowdStrike sales climbed by 29% to $1.01 billion to generate an EPS (equity per share) of $0.93 instead of $0.81 cents in consensus estimates. The Q3 profit number was exactly at the company's Q1 level, which was the second best quarterly result before the incident. CrowdStrike estimated its current quarter revenue to be between $1.03 billion and $1.04 billion, with a supposed annual adjusted EPS from $3.74 to $3.76, up from a previously forecasted range of $3.61 to $3.65.

From our point of view, these bare facts may confirm that CrowdStrike quickly cured its fresh wounds. Yet, this does not mean that an immediate price increase should be expected. Our baseline scenario after the quarterly report suggest that a retest of some lower area, let's say between $315 and $330 per share, would be desirable to attract more picking up investment power. We generally agree with Citigroup estimates which maintained a Buy rating on CrowdStrike and raised their price target to $400 from the previous $300, though mentioning impacts from Chinese cyber competition and extended sales cycles after the outage, but we could project such a target with a caveat of high chance of touching lower levels first, before the next wave of price recovery would be formed.

"Our single platform approach and trailblazing innovation continue to resonate at-scale,” CEO George Kurtz commented on better-than-feared results. "While the outage impact is still in play, Flex and financial services (CFS) are driving greater module adoption, larger deal sizes, and longer duration contracts... with customers opting for more modules vs. extended deal terms as part of the Customer Commitment Package (CPP)", Oppenheimer analysts noted, suggesting a likely recovery in the second half of 2026. "Hyper-growth modules in Cloud Security, Identity Protection, and Log Scale collectively surpassed $1 billion in ARR", according to conference call papers presented by CrowdStrike. Back to Citigroup analysis, they also feel offerings like FalconFlex end-to-end fleet management system to improve logistics and delivery and CrowdStrike Falcon Spotlight (CFS), which is a dynamic vulnerability management solution equipped with intuitive dashboards and filtering capabilities, will have a positive strategic impact on retention, expansion, competitive positioning, average selling price, and market consolidation. City also sees the growth pace of bookings in remaining performance obligations at approximately 70% YoY.

OMG Network (OMG) is down 2.2% this week, trading at $0.388, yet outperforming the broader market, where Bitcoin (BTC) has declined by 3.3% to $93,824. Despite the dip, OMG has held firmly above the key support level of $0.375, demonstrating resilience. This critical level serves as a foundation for potential recovery, with the next target set at $0.500 if the support remains intact.

Altcoins, including OMG, are showing signs of preparing for a fresh wave of gains. However, the broader market sentiment hinges on Bitcoin's ability to remain above $90,000 in the coming days. A breach of this threshold could undermine altcoin momentum, while stability or gains in Bitcoin would provide the necessary confidence for altcoins to rally further.

Many in the expert community began to leave the Fed's December rate cut in question. The reasoning behind that doubt is mainly related to more bets on potentially growing U.S. economy, with a better-than-feared release of PMI (purchasing managers' index) in November and the further nominal rise in consumer sentiment. Tamed numbers provided by the Conference Board think tank showed on Tuesday that the sentiment measure increased to 111.7 points again from an upwardly revised 109.6 points a month ago vs 99.2 points only in September. This could sound like a lovely promise of increasing demand, but large retailers before the sell-off season say that they are trying their best to cut costs in line with unwillingly discounted retail price ranges.

I guess that the Fed officials know the reality on the ground better than the language of macro statistics could express it, and so the Fed would deliver another 0.25% rate cut on December 18. Nearly 65% of futures traders on interest rates agreed with this by pricing a rate cut scenario for this date. In addition, the services PMI climbed to 57.0, from 55.0 in October, which could be considered as a sign of expansion due to higher average sales price just because the services became more expensive. As to the manufacturing PMI rising from 48.5 to 48.8 points month-on-month, it's cool but every indication below 50 still means a negative slope of the industrial segment dynamics. Again, home sales are not measured in abstract points showing the lowest level of 610,000 units of new single-family homes that were sold during the previous month since December 2022, compared to 751,000 in July 2024 and 738.000 in September 2024. Here bad numbers are self-evident, for high mortgage rates prevents households from buying properties.

Therefore, my conclusion is that the next rate cut step is predetermined, which is a clearly positive driver for U.S. equity markets, along with lower tax hopes under Trump. As a result, we are witnessing a new all-time high above 6,020 on the S&P 500 broad market daily close. As a matter of fact, the major barometer of Wall Street never consolidated or closed above the 6,000 milestone before. Technically, a watershed line between past and future ranges for the S&P 500 came after passing and retesting 5,650. With more than 90% of companies having already reported their Q3 earnings, some of major techs may lose steam for a while, like the AI flagship NVIDIA. Some consistently good stocks, like Dell yesterday night, may slump after falling moderately short of too high consensus estimates to be suspended on the lower floors for the nearest couple of months, for example. Yet, I personally see no major weakness in their annual performance. Otherwise, stock indexes would perform in a different manner.

If someone in the crowd is buying the particular stock because of a good PMI, that's not a bad thing. If some other investors are doing the same because they rather feel that poor economic trends are aggravating to push the Fed cutting rates for growing happiness of running bulls, it's O.K. If the third group of optimists are purely betting on MAGA (Make America Great Again) policy under Trump's tax cut and deregulation guidance, I am also happy to keep a net buying position in U.S. stocks. Various reasons to remain in a bullish camp, but each of them lead to the same market stance. Just a week ago, Goldman Sachs analyst group predicted the S&P 500 to hit 6,500 points before the end of 2025. They actually shared the view of analysts at Morgan Stanley which recently said that the recent earnings growth would be broadening to continue next year “as the Fed cuts rates into next year" while "business cycle indicators continue to improve” as well. Revealing a universal superposition of two upward drivers in one forecast is another sign of growing bullish strength on the mental plane.

Meanwhile, Goldman Sachs’s target is based on US economic expansion with supposed 11% earnings growth in the course of 2025 and an approximately 5% sales growth for the index, consistent with a 2.5% real GDP growth and a deceleration of inflation to 2.4%. Goldman expects net margins expanding to 12.3% in 2025 and then to 12.6% in 2026. The Trump administration will implement targeted tariffs on imported automobiles and certain imports from China, as well as a 15% corporate tax rate for domestic manufacturers, they say, as the net impact of these policy changes "roughly offset one another”.

A Thanksgiving week is closely associated not only with early colonists and native people having their first barbecue together. Late November used to bring more upticks on trending equity markets. This year was no exception, as the Dow Jones index of Wall Street hastily hit a historical record after rising 440 points on Monday to close at a new all-time peak of 44,736.57.

Meanwhile, the AI darling NVidia slipped to its 3-week low at $136 losing more than 4% on the same day. Tesla stock dropped down almost the same. The EV maker failed to expand a 40% upward momentum surge since the U.S. election led rather by agitating sentiment than fresh fundamental changes. A similar price adjustment pattern was observed for many other techs. This process could be described as a capital flow rotation into the so-called "cyclical" stocks, including industrial and financial segments, with the term "cyclical" being related to better synchronizing with expected periods of economic upturn or downturn. Unlike in previous years, the current time before and soon after Thanksgiving, which is officially celebrated in the fourth Thursday of the month (this year it falls on November 28), would barely be marked by a lot of consumerism. Most households are finding ways to live frugally, and so the new-fangled idea behind accelerated growth in cyclical stocks is now hope.

In particular, a fresh boost in overall market dynamics was fuelled by news that the U.S. President-elect Donald Trump nominated Scott Bessent, who is a prominent career investor, as Treasury Secretary instead of Janet Yellen. Being a billionaire hedge fund manager, Scott Bennett repeatedly called for tax cutting reforms and more decisive deregulation for businesses. But another encouraging side of this appointment is that he also opposed conceptions of too strict trade tariffs, which may lessen chances of an excessively damaging trade war against China and U.S. neighbouring countries under a second-term Trump administration. Trump hailed Bessent as a geopolitical and economic strategist and called Bessent's journey “the American dream”. True policy changes would need proof, but more favourable conditions including lower taxes for U.S. manufacturers will give it, with expectations already possessing investing souls. Another, but rather one-off and temporary help for the market sentiment was provided by reports that Israel may reach a ceasefire agreement with the Hezbollah military group based in Lebanon.

A minor intraday market retracement came out when Donald Trump emotionally threatened on Truth social network that he will impose additional 10% tariffs on all Chinese imports to the U.S. until Beijing authorities would act properly to curb the allegedly high flow of illegal drugs, particularly fentanyl, as “drugs were still pouring into our country, mostly through Mexico, at levels never seen before”, according to Trump. He added that he would impose a 25% tariff on all imports from Canada and Mexico as a punishment for illegal immigration and “one of my many first executive orders” after January 20. “This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country! Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem,” Trump posted on Sunday night, yet it had a limited effect on markets, with the Dow Jones Industrial Average (DJIA) futures only slid to a 44,500 area and then quickly recovered to test fresh highs above 44,800 once again.

A positive view for further market development still prevails and would probably remain during the nearest weeks before Christmas. The tech segment trend could be less stable right now, but we think it will also catch up fully, led by flagship stocks like NVidia, which is subject to natural and purely technical vulnerability on charts but has no major weakness according to the latest projections. Meanwhile, the U.S. manufacturing stocks, like a road construction machine monster Caterpillar (CAT), "drill, baby, drill" motto based U.S. oil companies and many others united into the Industrial Select Sector SPDR exchange-traded fund (XLI) may lead the bullish race. Having recently closed around $143.50, XLI price could rise to our next target at $160+ in the 3 to 6 months horizon, being now blessed with a better chance to be attained sooner than a 6,500 target for the S&P 500 broad market barometer.