CrowdStrike Holdings shares fell sharply lower in early Friday trading after an update to the cybersecurity group’s threat-monitoring software was linked to one of the biggest global IT disruptions on record.
CrowdStrike (CRWD) said it has deployed a fix for the update to its ‘Falcon Sensor’ software, which affected Microsoft (MSFT) Windows systems around the world, but insisted that it wasn’t linked to a “security incident or cyberattack”.
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The update error effectively placed hundreds of millions of computers around the world in an endless ‘update’ loop that left them stuck on a recovery page with only a ‘Blue Screen of Death’ on display.
CrowdStrike CEO George Kurtz said a software update error, and not a cyber attack, was the cause of the overnight global IT outage.
CrowdStrike
Crowdstrike CEO goes into damage control after IT crisis
“CrowdStrike is actively working with customers impacted by a defect found in a single content update for Windows hosts.” CEO George Kurtz said in a statement. “Our team is fully mobilized to ensure the security and stability of CrowdStrike customers”.
Disruptions from the update error, as well as a separate issue with Microsoft’s Azure cloud services, were reported dozens of countries around the world, affecting industries from travel, healthcare, finance and media.
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The direct connection to CrowdStrike, however, is likely to have a significant impact on its second half financials, and could alter the group’s earlier forecast of full-year revenues in the range of $3.97 billion and $4.03 billion, which it issued last month following a solid set of first quarter earnings.
“Today CrowdStrike becomes a household name but not in a good way and this will take time to settle down but does not change our positive long term view of CrowdStrike or cyber security sector,” said Wedbush analysts Dan Ives, who called the event a “major black eye” for the group.
“It could create opportunity for some competitive displacements but this will take time to determine the path of CIOs and companies looking ahead and related legal actions related to this outage,” he added.
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CrowdStrike shares, which were added to the S&P 500 on June 24, were marked 12.6% lower in premarket trading to indicate an opening bell price of $299.43 each, a move that would trim the stock’s 2024 gain to around 17.3%.
Rivals Palo Alto Networks (PANW) and SentinelOne (S) were trading higher in permarket, rising 1.37% and 7.75% respectively.
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