Shares of cybersecurity giant CrowdStrike fell more than 10% on Friday after a botched software update caused a stunning mass shutdown of businesses around the world.
CrowdStrike CEO George Kurtz tried to apologize for the crisis, which affected millions of customers using Microsoft Windows — hurting airlines, banks, hospitals and various other customers.
“This is definitely a big black eye for CrowdStrike and the stock will be under pressure as this Microsoft-related global outage has caused massive disruption globally,” Wedbush analyst Daniel Ives said in a note on Friday.
Tesla, SpaceX and X boss Elon Musk said his various companies have “deleted CrowdStrike from all our systems, so it doesn’t appear at all” in a post on his social media platform.
Tesla was forced to halt several production lines in Texas and Nevada due to the global IT outage, Business Insider reported Friday, citing sources familiar with the matter.
“It caused a seizure in the automotive supply chain,” Musk said in a response to a tweet from Microsoft CEO Satya Nadella about the outage.
The upgrade fiasco marked a significant setback for CrowdStrike, which had seen shares rise nearly 100% over the past 12 months as companies put more emphasis on cybersecurity and hack prevention.
“I don’t think it’s too early to call it: this will be the biggest IT outage in history,” added cybersecurity expert Troy Hunt.
Windows users experienced computer crashes and the dreaded “blue screen of death” that left them unable to restart. The issue was traced to Falcon, a CrowdStrike service that scans company devices for hacking attempts and other cybersecurity threats.
Kurtz told NBC’s “Today” show that he was “deeply sorry” for the global chaos caused by the bug. In an X post, he said the incident was not caused by a cyber attack or security breach.
“CrowdStrike is actively working with customers affected by a flaw found in a single content update for Windows hosts,” Kurtz wrote. “Mac and Linux hosts are not affected.”
The company issued a fix, but it could take weeks for some users to get back online, an expert said.
“The regulation that CrowdStrike has provided is quite manual and can be difficult, in some cases, to deploy at scale,” Simo Kohonen, founder of the Finland-based network security company, told the Wall Street Journal. , Defused.
The Austin, Texas-based company is among the world’s most popular cybersecurity providers, with nearly 30,000 subscribers globally.
But the disruption could force customers and investors to rethink their reliance on the company, opening the door to potential rivals such as Palo Alto Networks, which saw its shares rise 2.2% on Friday, and Sentinel One, which throw almost 8%.
CrowdStrike closed at $304.96, down 11% on Friday.
“This event is a reminder of how complex and intertwined our global computer systems are and how vulnerable they are to a mistake and an error,” said Gil Luria, senior software analyst at DA Davidson.
“While most companies don’t really have an alternative to Microsoft, they do have security alternatives,” he added.
“This may cause many companies to reconsider which security product they use and whether they should diversify across different security products to prevent these types of disruptions.”
Microsoft’s chief communications officer, Frank Shaw, told X that the company was supporting customers while they recovered their systems.
Its shares fell less than 1%.
CrowdStrike, which has previously reached a market cap of about $83 billion, posted revenue of $2.24 billion in fiscal 2023, a 54% increase over the previous year.
“Today CrowdStrike becomes a household name, but not in a good way, and this will take time to settle, but it does not change our positive long-term view of CrowdStrike or the cybersecurity sector,” Ives said in the note. his for customers.
The software glitch added more pressure to tech stocks. Earlier this week, shares of chipmakers such as Nvidia fell amid warnings of new trade restrictions imposed by the Biden administration and Donald Trump’s assertion that Taiwan must pay the US for protection against China.
The tech-heavy Nasdaq slipped 144 points, or 0.8%, continuing a three-day slide of nearly 10% after hitting a record high of 18,647 last week.
However, longer-term trends such as the Federal Reserve’s expected interest rate cuts and the rise of artificial intelligence as reasons for optimism, according to Glen Smith, chief investment officer at GDS Wealth Management.
“The technology sector is currently on sale,” Smith said in a note.
“While there are significant declines in the stocks of individual companies that are closer to this tech break, we expect the broader markets to look after Friday’s break,” he added.
#CrowdStrike #shares #fall #global #outage #mass #chaos #big #black #eye
Image Source : nypost.com