What happened
News of a fresh investment in a peer sent the share price of CrowdStrike Holdings (NASDAQ: CRWD) up on Tuesday, but the bump wasn’t very substantial. At the end of the day, CrowdStrike’s stock gained only 0.7%, which wasn’t enough to overtake the S&P 500 index’s 1.4% gain.
So what
Tuesday morning, CrowdStrike said its strategic investment unit Falcon Fund had invested in Abnormal Security, a business that harnesses artificial intelligence (AI) to perform its work. CrowdStrike described this privately held company as “the leading behavioral AI-based security platform.”
The investment is also accompanied by a strategic technology partnership agreed upon by the two companies. Under the terms of this arrangement, CrowdStrike’s Falcon cybersecurity platform is to be integrated with Abnormal’s platform to, in the former’s words, “offer best-in-class email and endpoint attack detection and response with automated account remediation.”
On the main page of its website, Abnormal Security features the logos of prominent companies and organizations such as Mattel, Foot Locker, and the National Football League, implying they are clients.
Now what
Neither CrowdStrike nor Abnormal disclosed the financial particulars of their arrangement, which is likely one cause of the market’s muted response. Investors like to have some idea of the scale and scope of an investment — even better, an estimate of how that outlay might benefit (or harm) their company’s fundamentals.
Nevertheless, the tie-up feels like a solid and sensible move by CrowdStrike. It also provides more capabilities with AI, a white-hot item with investors just now.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike. The Motley Fool recommends Foot Locker. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
