CrowdStrike shares fall 13% in another day of crushing losses after triggering global outages

Shares of CrowdStrike fell 13% on Monday, extending their losing streak, after Wall Street analysts downgraded the stock on concerns over the financial fallout from a global cyber outage last week.

CrowdStrike’s surprise update to its security software crashed computers powered by Microsoft’s Windows operating system, disrupting Internet services across the globe and affecting a wide range of industries including airlines, banking and healthcare.

Microsoft said on Saturday that about 8.5 million Windows devices, or less than 1% of all Windows machines, were affected.

While analysts largely expect CrowdStrike to recover from the incident given its industry-leading position, concerns about reputational damage, a hit to new customer contracts, competition and potential legal wrangles remain.

“We don’t believe it will materially affect renewals, at least not in the short term … However, we think it will at least delay deal signings, if not cause some losses in closely contested deals, ” Guggenheim analysts said on Sunday.

Meanwhile, shares of rival SentinelOne rose 11% on Monday, with JPMorgan calling the company the “most obvious beneficiary” of what analysts say is the biggest IT outage in modern history.

There was a non-zero chance that legal battles would play out once CrowdStrike’s customers got their systems up and running again, Bernstein analyst Peter Weed said.

Services across industries gradually returned online later Friday, but firms were dealing with congestion, delays and even flight cancellations, raising questions about how to avoid such a situation in the future and whether such critical software it 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 cut their price targets on CrowdStrike, with two more downgrading the stock to “neutral” from “buy.”

“The globally disruptive nature of this event is likely to have an impact on CrowdStrike’s financial and operational performance … Time spent on damage control is time spent not selling,” JPMorgan analysts said.