Narrow-moat
CrowdStrike
(CRWD)
said
a
faulty
update
was
the
reason
behind
the
massive
technology
outage
that
affected
millions
of
users
in
the
early
hours
of
July
19.
Customers
using
CrowdStrike’s
security
platform
were
locked
out
of
their
Windows
devices.
While
details
are
still
emerging,
CrowdStrike’s
initial
response
emphasised
that
this
incident
was
not
a
security
breach
and
that
the
faulty
update
has
been
rectified.
We
find
some
credence
in
this
response,
considering
that
within
hours
of
the
outage,
companies
with
operations
affected
by
CrowdStrike’s
update
have
been
able
to
gradually
resume
their
services.
CrowdStrike
Stock
Update
Investors
appear
to
have
been
spooked
by
recent
high-profile
security
incidents
and
sold
CrowdStrike’s
shares,
with
the
stock
dropping
more
than
10%.
We
think
this
market
reaction
is
overly
punitive,
especially
considering
that
the
update
doesn’t
represent
a
breach
of
CrowdStrike’s
security
apparatus.
While
the
shares
still
trade
in
3-star
territory
after
the
premarket
drop,
we
think
the
current
pullback
represents
a
good
buying
opportunity
for
long-term
investors
looking
for
high-quality
security/software
exposure.
While
we
don’t
have
a
full
postmortem
on
the
faulty
update
that
led
to
this
morning’s
chaos,
we
suspect
that
CrowdStrike’s
central
cloud,
which
pushes
updates
across
its
entire
customer
base
simultaneously,
played
a
key
role.
While
this
feature
enables
CrowdStrike
to
continuously
update
its
customers’
security
apparatus,
it
also
enabled
a
substandard
update
to
be
pushed
onto
the
company’s
entire
customer
base,
essentially
halting
operations
at
major
airports
and
media
networks,
among
others.
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