CrowdStrike shares plunged 13% on Monday, extending losses as Wall Street analysts downgraded the company’s shares due to concerns about the economic impact of last week’s global cyber outage.
A faulty update to CrowdStrike’s security software crashed computers running Microsoft’s Windows operating system and disrupted internet services around the world, affecting a wide range of industries including aviation, banking and healthcare.
Microsoft said Saturday that about 8.5 million Windows devices were affected, or less than 1% of all Windows machines.
Analysts generally expect CrowdStrike to recover from the incident given its industry leadership, but concerns remain about reputational damage, the impact on new customer contracts, competition and potential legal disputes.
“We don’t expect this to have a material impact on renewals, at least in the short term, but it will likely delay deal closings at the very least and even potentially result in losses on hotly contested deals,” Guggenheim analysts said Sunday.
Meanwhile, shares in rival SentinelOne surged 11% on Monday, with JPMorgan describing the company as the “most obvious beneficiary” of what analysts are calling the biggest IT outage in modern history.
Bernstein analyst Peter Weed said a legal battle was possible after CrowdStrike’s customers got their systems up and running again.
Services across the industry were gradually resuming late Friday, but companies are dealing with backlogs, delays and even flight cancellations, raising questions about how to avoid such situations in the future and whether such critical software should remain in the hands of a few companies.
CrowdStrike shares were trading at $265.24 on Monday after falling 11% on Friday. At least six brokerages lowered CrowdStrike’s price target, and two more downgraded the company to “neutral” from “buy.”
“The global disruption caused by this incident is likely to impact CrowdStrike’s financial and operational performance… Time spent controlling the damage is equivalent to time not making sales,” JPMorgan analysts said.
