CrowdStrike shares tumble as fallout from global tech outage continues

CrowdStrike
shares
slipped
13%
during
Monday’s
trading
session,
as
the
cybersecurity
software
company
continued
to
help
clients
across
industries
recover
from
an
outage
that
took
millions
of


Microsoft
Windows
devices
offline
last
week.

Early
on
Friday,
the
company
issued
a
defective
update
to
its
Falcon
vulnerability-protection
software
that
caused
PCs,
computer
servers
in
data
centers
and
display
screens
to
crash,
resulting
in

grounded
flights
and
canceled
medical
appointments.
The
incident
ensnared
8.5
million
Windows
devices,
less
than
1%
of
the
global
total,

Microsoft
said.

IT
staffers
quickly
worked
to
fix
computers.
Meanwhile,
hackers
sought
to
take
advantage
of
the
confusion
by
setting
up

malicious
websites
that
appeared
to
offer
software
updates.
CrowdStrike
CEO
George
Kurtz

addressed
the
situation
on
air
with
CNBC’s
Jim
Cramer.

CrowdStrike
shares
fell
11%
on
Friday.
But
then,
over
the
weekend,
people
shared

photos
on
social
media
of
Windows
devices
displaying
the
so-called
“blue
screen
of
death,”
a
sign
of
computers
in
need
of
attention
from
administrators.
CrowdStrike
said
on
Sunday
that
it
was
testing
a
method
that
would
fix
affected
machines
more
quickly.

Guggenheim
Securities
downgraded
its
rating
on
CrowdStrike
shares
to
neutral
from
buy
on
Sunday.
Analysts
led
by
John
DiFucci
said
the
stock
was
still
trading
at
“the
highest
multiple
of
recurring
revenue
across
our
entire
software
coverage.”

It
might
take
time
for
CrowdStrike
to
repair
its
image,
and
the
fallout
will
probably
hurt
signings,
the
analysts
wrote.
Signings
are
an
early
estimate
of
contract
value
from
new
and
existing
customers
that
can
give
investors
a
sense
of
a
company’s
potential
for
revenue
generation.

“We
still
have
the
utmost
respect
for
the
leadership
team
at
CrowdStrike
and
believe
that
the
company
will
eventually
become
even
stronger
as
a
result
of
this
incident,
and
if
investors
have
a
multi-year
horizon,
they
can
ride
it
out,”
they
wrote.
“However,
we
find
it
difficult
to
tell
investors
that
they
need
to
buy
CRWD
right
now.”

Goldman
Sachs
maintained
their
buy
rating
on
CrowdStrike
shares
in
a
note
issued
early
Monday.
But
analysts
at
the
investment
bank
said
they
expected
CrowdStrike’s
deals
to
take
longer
to
close
between
the
time
of
the
outage
and
July
31
—
the
end
date
of
the
software
company’s
fiscal
second
quarter.

“Our
recent
conversations
reaffirm
our
view
that
there
will
likely
be
minimal
share
shifts
in
endpoint
post
this
event
—
although
we
recognize
that
additional
details
in
the
postmortem
will
further
inform
this
view,”
analysts
led
by
Gabriela
Borges
wrote.

They
pointed
to
a
2010
McAfee
outage
that
caused
computer
crashes
to
give
a
sense
of
what
came
before
last
week’s
events.

“The
revenue
impact
due
to
deferrals
was
about
$6
million
of
deferred
revenue
not
recognized
from
the
balance
sheet,
and
revenue
was
also
negatively
impacted
by
another
approximately
$14
million,”
then-CEO
Dave
DeWalt
told
analysts
in
July
of
that
year
on
a

conference
call.
Kurtz
was
McAfee’s
chief
technology
officer
at
the
time.

Less
than
one
month
after
the
McAfee
earnings
call,
Intel

announced
its
intent
to
buy
the
antivirus
company
for
$7.7
billion.

“This
is
an
evolving
situation,”
CrowdStrike
said
in
a

regulatory
filing
on
Monday. “We
continue
to
evaluate
the
impact
of
the
event
on
our
business
and
operations.”