Is CrowdStrike Holdings, Inc. overvalued or undervalued?

As of 4 March 2025, the valuation grade for CrowdStrike Holdings, Inc. has moved from fair to risky, indicating a shift in perception regarding its financial health and market position. The company is currently considered overvalued, primarily due to its negative earnings and high valuation ratios. Notable ratios include a Price to Book Value of 33.83, an EV to EBIT of -454.07, and an EV to Sales of 27.29, which suggest that the market is pricing the stock at a premium despite its losses.
In comparison to peers, CrowdStrike's P/E ratio is significantly negative at -812.92, while ServiceNow, Inc. and Palo Alto Networks, Inc. are deemed very expensive with P/E ratios of 135.35 and 104.86, respectively. This stark contrast highlights the challenges CrowdStrike faces in justifying its current valuation. Additionally, despite recent stock performance outpacing the S&P 500, with a year-to-date return of 43.74% compared to the S&P 500's 2.44%, the underlying financial metrics suggest that the stock is not supported by fundamentals, reinforcing the view that it is overvalued.