CrowdStrike Shares Drop 15% After Major Outage

Shares of CrowdStrike fell 15% after a defective update caused a major outage, impacting global IT systems, while Microsoft, also affected, saw a 2% premarket drop

Following a significant disruption that affected businesses worldwide, CrowdStrike, a cybersecurity firm, experienced a decline in its stock price on Friday.

The company, which develops software to assist organizations in managing their security in IT environments, experienced a 15% decline in its stock price during premarket trading in the United States.

George Kurtz, CEO of CrowdStrike, addressed the incident on Friday morning, stating that the issues resulted from “a defect discovered in a single content update for Windows hosts.”

“This is not a cyberattack or security incident,” Kurts stated in a post on the social media platform X that the issue has been identified and isolated, and a remedy has been deployed.

In premarket trading, Microsoft experienced a 1.8% decline, in addition to reporting issues with its Azure cloud services and Microsoft 365 suite of applications.

Amid an ongoing IT outage, various websites were unavailable on Friday morning, as aircraft were grounded and TV studios suspended broadcasting.

CrowdStrike experienced a significant outage on Friday due to an update issue that affected its Falcon Sensor product. This product is intended to prevent cyber intrusions through cloud technology. CrowdStrike is currently in the process of reverting the update globally.

CrowdStrike informed NBC News in a recorded phone message that it is aware of reports of failures on Windows hosts associated with the Falcon Sensor.

According to cybersecurity specialists, the update issue at CrowdStrike was the direct cause of the “blue screen of death” error that affected Windows systems worldwide. Laptops displayed this error screen.

The announcement follows Microsoft’s announcement on Friday that its cloud services had been largely restored following a disruption that affected its cloud applications in the United States. It is unclear whether this outage was associated with CrowdStrike’s update.

A single point of failure in the cyber supply chain can have enormous global ripple effects, as demonstrated by the global outage.

Other cyber firms benefit from CrowdStrike’s difficulties.
In the past year, CrowdStrike has been a successful cyber stock, with its shares increasing by nearly 118%.

Some analysts had expressed concerns regarding CrowdStrike’s exorbitant valuation, which stood at $83.5 billion as of Thursday’s close.

This week, Nina Marques, an analyst at Redburn Atlantic, stated that the company is encountering difficulties in the very large enterprise market due to its competition with other cyber firms.

Marques stated in a research note released on Thursday that CrowdStrike’s premium valuation has been sustained by its superior performance in the endpoint protection market compared to its peers.

“While we do not dispute the quality and performance of CrowdStrike’s products, we anticipate that the company will face difficulties establishing a presence in the large enterprise market to optimize cross-sell opportunities and mitigate deflationary effects.”

On Thursday, the research firm downgraded CrowdStrike’s stock to “sell” and reduced its price target to $275, a 28% decrease from $380.

CrowdStrike’s stock plummeted on Friday, resulting in the benefit of other cybersecurity vendors. This was likely due to investors’ speculation that businesses may abandon CrowdStrike and migrate to competing firms.

_{Arjun Kharpal of CNBC contributed to this report.}