Shares of cybersecurity giant CrowdStrike plunged 10% to $307.65 per share Friday trading after a faulty software update caused a stunning mass shutdown of businesses around the world.
CrowdStrike CEO George Kurtz scrambled to apologize for the crisis, which affected millions of customers using Microsoft Windows — crippling airlines, banks, hospitals and various other clients.
“This is clearly a major black eye for CrowdStrike and the stock will be under pressure after this global outage related to Microsoft has caused massive disruption globally,” Wedbush analyst Daniel Ives said in a note Friday.
The incident marked a significant setback for CrowdStrike, which had seen shares rise nearly 100% over the last 12 months as companies place more emphasis on cybersecurity and hack prevention.
“I don’t think it’s too early to call it: this will be the largest IT outage in history,” added cybersecurity expert Troy Hunt.
Windows users experienced computer crashes and the dreaded “blue screen of death” that left them unable to restart. The issue was traced to Falcon, a CrowdStrike service that scans company devices for hacking attempts and other cybersecurity threats.
The company issued a fix but it could take weeks for some users to get back online, one expert said.
“The fix CrowdStrike has given is quite manual and may be difficult, in some cases, to deploy at large scale,” Simo Kohonen, founder of Finland-based network security company Defused, told the Wall Street Journal.
Microsoft’s stock initially ticked lower but was down just 0.24% as officials confirmed a fix was underway. Big Tech giants Apple and Google parent Alphabet rose slightly.
Rival cybersecurity firms appeared to benefit from the misstep. Palo Alto Networks, Fortinet, and Cloudflare each rose about 1% in early trading.
Despite the chaos, the tech-heavy Nasdaq Composite was flat in early trading, as was the broad-based S&P 500. The Dow Jones Industrial Average fell about 200 points, or less than 1%.
Though not as well-known as some tech firms, CrowdStrike is considered a major player in the budding cybersecurity industry. The company’s revenue was $2.24 billion in fiscal 2023, a 54% increase compared to the previous year.
“Today CrowdStrike becomes a household name but not in a good way and this will take time to settle down but does not change our positive long-term view of CrowdStrike or cyber security sector,” Ives said in his note to clients.
The software glitch added more pressure on tech stocks. Earlier this week, shares of chipmakers such as Nvidia plunged on warnings of new trade restrictions imposed by the Biden administration and Donald Trump’s assertion that Taiwan should pay the US for defense against China.
Still, long-term trends like expected Federal Reserve interest rate cuts and the rise of artificial intelligence as reasons for optimism, according to Glen Smith, chief investment officer at GDS Wealth Management.
“The tech sector is currently on sale,” Smith said in a note.
“While there are sizable declines in the stocks of the individual companies that are closest to this tech outage, we expect the broader markets to look past Friday’s outage,” he added.
Kurtz told NBC’s “Today” show that he was “deeply sorry” for the global chaos caused by the glitch. In an X post, he said the incident was not caused by a cyberattack or security breach.
“CrowdStrike is actively working with customers impacted by a defect found in a single content update for Windows hosts,” Kurtz wrote. “Mac and Linux hosts are not impacted.”
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