CrowdStrike Shares Fall 13% After IT Outage

After Wall Street analysts downgraded CrowdStrike stock on Monday due to financial concerns from a global cyber outage last week, shares fell 13%, extending their losing streak

The internet services of various industries, such as airlines, finance, and healthcare, were disrupted worldwide due to CrowdStrike’s malfunctioning security software update, which crashed computers running Microsoft’s Windows operating system.

Microsoft announced on Saturday that approximately 8.5 million Windows devices, which accounts for less than 1% of all Windows machines, were impacted.

Although analysts anticipate that CrowdStrike will recover from the incident due to its dominant position in the industry, there are still concerns regarding reputational damage, potential legal disputes, competition, and new customer contracts.

“We think renewals will not be significantly impacted, at least not in the immediate future.” On Sunday, analysts at Guggenheim stated, “We believe that this will at least delay the signing of deals, if not result in some losses in closely contested deals.”

According to analysts, SentinelOne’s shares experienced an 11% increase on Monday, as J.P. Morgan characterized the company as “the most obvious beneficiary” of the most extensive IT outage in modern history.

Peter Weed, an analyst at Bernstein, stated that there was a non-zero probability that legal disputes would arise following the restart of CrowdStrike’s customers’ systems.

Despite the gradual resumption of services across industries on Friday, firms still grappled with backlogs, delays, and canceled flights. This situation has prompted inquiries regarding the efficacy of concentrating critical software in the hands of a small number of companies and the potential for future issues.

On Monday, CrowdStrike’s shares were trading at $265.24, following an 11% decline on Friday. CrowdStrike’s equity rating was downgraded from “buy” to “neutral” by two additional brokerages and the six that reduced their price targets.

“The financial and operational performance of CrowdStrike will likely be affected by the globally disruptive nature of this event.” According to analysts at J.P. Morgan, the time spent on damage control is time that is not spent on selling.