Shares of cybersecurity giant CrowdStrike Inc. plunged 10% to $307.65 per share in trading on Friday after a flawed software update caused shocking mass shutdowns at businesses around the world.
CrowdStrike CEO George Kurtz issued a hasty apology for the crisis, which affected millions of customers who use Microsoft Windows and disrupted airlines, banks, hospitals and a range of other clients.
“This is clearly a major blemish on CrowdStrike and the company’s stock price will likely decline due to the significant global disruption caused by this Microsoft-related outage,” Wedbush analyst Daniel Ives said in a note on Friday.
The incident was a major blow to CrowdStrike, whose shares had risen nearly 100% over the past 12 months as the company focused on cybersecurity and hack prevention.
“I don’t think it’s too early to say that this will be the biggest IT outage in history,” he added. Cybersecurity expert Troy Hunt.
Windows users experienced the dreaded “blue screen” that caused their computers to crash and become unable to reboot. The issue was blamed on Falcon, a CrowdStrike service that scans corporate devices for hacking attempts and other cybersecurity threats.
The company has released a fix, but it could be weeks before some users are back online, one expert said.
“The fixes offered by CrowdStrike are highly manual and in some cases may be difficult to deploy at scale,” said Simo Kohonen, founder of Finnish network security company Defused. He told The Wall Street Journal.
Microsoft shares initially fell but ended up down just 0.24% after regulators confirmed a correction was underway. Shares of tech giants Apple and Google’s parent company Alphabet rose slightly.
Rival cybersecurity companies appeared to benefit from the gaffe: Shares of Palo Alto Networks, Fortinet and Cloudflare were each up about 1% in early trading.
Despite the turmoil, the tech-heavy Nasdaq Composite Index was flat at the open, as was the S&P 500. The Dow Jones Industrial Average was down about 200 points, or less than 1 percent.
While CrowdStrike isn’t as well-known as some tech companies, it is considered a major player in the emerging cybersecurity industry. The company expects revenue of $2.24 billion in fiscal year 2023, up 54% from the prior year.
“Today, CrowdStrike has become a household name, and not in a good way, and it will take some time to settle. However, our long-term positive view on CrowdStrike and the cybersecurity sector remains unchanged,” Ives said in a client note.
The software glitch added to pressure on tech stocks. Shares in chipmakers such as Nvidia fell sharply earlier this week following warnings of new trade restrictions from the Biden administration and Donald Trump’s insistence that Taiwan should pay for the U.S.’s defense against China.
Still, long-term trends like expected interest rate cuts from the Federal Reserve and the rise of artificial intelligence provide reason for optimism, according to Glenn Smith, chief investment officer at GDS Wealth Management.
“The technology sector is currently on sale,” Smith said in the note.
“While the stock prices of the individual companies most affected by the technology outage have fallen sharply, we expect the market as a whole to ignore Friday’s outage,” he added.
Kurtz said on NBC’s “Today” show that he was “deeply sorry” for the global disruption the glitch caused. In a post on X, he said the incident was not the result of a cyberattack or security breach.
“CrowdStrike is actively working with customers affected by the flaw found in the single content update for Windows hosts,” Kurtz wrote. “Mac and Linux hosts are not affected.”
