CrowdStrike’s shares fell by 13% on Monday as the cybersecurity firm continued to address the fallout from a widespread outage caused by a faulty software update. This decline followed an 11% drop on Friday, after the company’s Falcon vulnerability-protection software update led to millions of Microsoft Windows devices crashing.
The update, issued early Friday, affected 8.5 million Windows devices, causing significant disruptions, including grounded flights and canceled medical appointments. Despite swift efforts by IT staff to mitigate the damage, hackers attempted to exploit the chaos with malicious websites posing as legitimate software updates.
CEO George Kurtz addressed the situation on CNBC, emphasizing the company’s commitment to resolving the issue. However, the incident has already had significant repercussions for CrowdStrike’s reputation and business prospects.
Guggenheim Securities downgraded CrowdStrike to neutral from buy, citing concerns about long-term reputational damage and potential delays in new contract signings. Analyst John DiFucci noted that while existing customer renewals may not be significantly impacted, new deals could be delayed, and the company might lose out on competitive contracts.
BTIG analyst Gray Powell also downgraded CrowdStrike to neutral, highlighting feedback from senior security executives who expressed concerns about the company’s reliability. Powell suggested that current customers might demand larger discounts and credits for the disruptions caused by the outage.
Despite these downgrades, Goldman Sachs maintained its buy rating on CrowdStrike, though it acknowledged potential delays in deal closures through the end of the fiscal second quarter on July 31. Analysts pointed to a similar incident in 2010 involving McAfee, which also experienced a significant outage but ultimately recovered.
CrowdStrike is actively working to restore affected systems, with substantial progress reported. The company stated, “This is an evolving situation. We continue to evaluate the impact of the event on our business and operations.” As the company navigates the aftermath of the outage, its ability to recover and maintain market confidence remains a critical concern for investors and stakeholders.
Be First to Comment