CrowdStrike Holdings, Inc. (CRWD) shares plummeted 5.10% during intraday trading on Monday, as investors grappled with concerns over the company's high valuation and ongoing federal investigations. The cybersecurity firm's stock has been facing increased scrutiny in recent weeks, leading to a significant sell-off.

The sharp decline comes as CrowdStrike trades at a premium valuation compared to its peers in the Zacks Security industry. With a forward 12-month price-to-sales (P/S) ratio of 18.65X, significantly higher than the industry average of 12.53X, investors are questioning whether the stock's lofty valuation is justified. Adding to the pressure, CrowdStrike is currently under investigation by the U.S. Department of Justice and the Securities and Exchange Commission (SEC) over a $32 million deal with Carahsoft Technology, raising concerns about potential financial irregularities.

Further compounding the stock's woes are reports of slowing upsells to existing customers, moderate churn rates, and downward revisions to earnings estimates. Analysts have lowered CrowdStrike's fiscal 2026 earnings projections, indicating a potential year-over-year decline of 13.5%. The company also faces intense competition from cybersecurity rivals like Palo Alto Networks, SentinelOne, and Cisco, who offer similar products and may capitalize on CrowdStrike's current challenges. Given these factors, some analysts are recommending investors sell CrowdStrike shares, citing mounting legal risks, slower growth, and a disappointing profit outlook for the near term.