Cybersecurity ETFs down after CrowdStrike Holdings warns on economic slowdown
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Exchange traded funds tied to cybersecurity were mostly down during Wednesday's intraday trading, after industry player CrowdStrike (NASDAQ:CRWD) announced a Q4 sales outlook that fell short of consensus. The company also said new subscriptions came in below expectations amid macro headwinds and longer customer buying cycles.
CRWD is owned by 177 different ETFs and acts as a major holding of the Simplify Volt Cloud and Cybersecurity Disruption ETF (NYSEARCA:VCLO), where the stock sits at a portfolio allocation of 9.48% as per ETF.com. This is the largest weighting of CRWD in any ETFs in the market.
The company is also well represented in Listed Funds Trust - TrueMark AI & Deep Learning ETF (LRNZ) with 8.43% weighting, Global X Cybersecurity ETF (BUG) with 7.71% weighting, First Trust NASDAQ Cybersecurity ETF (CIBR) with 6.02% weighting and First Trust US Equity Opportunities ETF (FPX) with 5.32% weighting.
Here are the ETFs with large holdings in CRWD and their intraday performance on Wednesday: VCLO -1.7% LRNZ -1.9% BUG -3.4% CIBR -2.3% FPX -0.7%
Shares of cybersecurity company plunged more than 20% after it guided Q4 revenue in the range of $619.1M to $628.2M vs. consensus of $634.2M. The weak guidance despite better-than-expected Q3 results. The firm also expects non-GAAP EPS in the range of $0.42 to $0.45 a share, which surpassed estimates of $0.34.
âTotal net new ARR was below our expectations as increased macroeconomic headwinds elongated sales cycles with smaller customers and caused some larger customers to pursue multi-phase subscription start dates, which delays ARR recognition until future quarters. We expect these macro headwinds to persist through Q4,â George Kurtz, co-founder and chief executive, told analysts on a conference call.
The weak forecast prompted a wave of negative analyst responses. Stifel downgraded the stock to Hold from Buy and lowered the price target to $120 from $225 while several other analysts reiterated the rating on the stock with price target cut.

Truist lowered the PT to $200 from $275.
RBC Capital lowered the PT to $165 from $200.
Needham lowered the PT to $165 from $225.
Barclays lowered the PT to $155 from $180.
Deutsche Bank lowered the PT to $150 from $230.
Mizuho cut the PT to $175 from $205

The sell-off in CrowdStrike (CRWD) resulted in declines for other cybersecurity stocks, including Fortinet (FTNT), CyberArk (CYBR), Palo Alto Networks (PANW) and Check Point Software (CHKP).
CRWD lost 50% of its value over a period of one year.