The Stock of Crowdstrike Plummets as the World's Largest Outage is Reported

A significant outage connected to cybersecurity firm CrowdStrike Holdings has caused widespread disruptions to Microsoft Corp. systems worldwide, potentially marking the largest IT outage in history.

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CrowdStrike’s stock (CRWD) experienced a sharp decline of 11.02% on Friday following the global outage, although it showed some recovery after trading began. The outage impacted Microsoft-powered (MSFT) computers, leading to disruptions in various sectors including flights, banking, publishing, and numerous other industries. Governments and airlines have attributed these outages to CrowdStrike.

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In the early hours of Friday, CrowdStrike’s stock was down 9.0%, after having plunged as much as 15.4% earlier in the session.

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Online security expert Troy Hunt, founder and CEO of the data-breach notification service Have I Been Pwned, described the outage as unprecedented. “I don’t think it’s too early to call it: this will be the largest IT outage in history,” Hunt posted on X, formerly known as Twitter. He further compared the situation to the anticipated Y2K bug, stating, “This is basically what we were all worried about with Y2K, except it’s actually happened this time.”

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As CrowdStrike's stock fell, shares of its cybersecurity peers displayed mixed responses: Palo Alto Networks Inc. (PANW) rose by approximately 2%, Fortinet Inc. (FTNT) dipped slightly, and Check Point Software Technologies Ltd. (CHKP) experienced a fractional increase.

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Wedbush analysts, led by Dan Ives, emphasized the severity of the incident for CrowdStrike, stating, “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.”

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William Blair analysts, led by Jonathan Ho, echoed this sentiment, using the same "black eye" metaphor. They noted, “Ordinarily, CrowdStrike’s global reach is a significant positive, but time will tell if this issue impacts any future business opportunities, as organizations are still resolving the issue.”

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Reports have linked the disruptions to CrowdStrike’s Falcon Sensor platform. CrowdStrike CEO George Kurtz addressed the issue in a social media post, assuring that the company has identified the problem. “CrowdStrike is actively working with customers impacted by a defect found in a single content update for Windows hosts. Mac and Linux hosts are not impacted,” he explained. Kurtz clarified, “This is not a security incident or cyberattack. The issue has been identified, isolated, and a fix has been deployed.”

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Jonathan Ho from William Blair mentioned that the resolution process could be prolonged as affected machines have entered a rolling reboot state. This situation necessitates manual intervention for each device, complicating remote patching due to the continuous rebooting.

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CrowdStrike shares have plunged more than 17% over a four-session losing streak. The stock had already declined by 3.4% on Thursday following a downgrade to sell by Redburn Atlantic.

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Nina Marques from Redburn provided a stark outlook on the potential implications for CrowdStrike’s business. “This situation could have serious implications for CrowdStrike’s business, particularly as it seeks to expand adoption among large enterprises to drive the next phase of growth,” Marques stated in a Friday update. She also noted the possibility of market share shifts as customers might look for alternative security solutions in light of this incident.

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Overall, this outage represents a significant challenge for CrowdStrike, testing the company’s resilience and its ability to manage and recover from such widespread disruptions. The long-term impact on CrowdStrike’s business and reputation will depend on how effectively and swiftly they can address and resolve the issues caused by the outage.

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