Ever get the feeling you’re being watched?
Well, you’re not alone.
The singer Rockwell — supported by Michael Jackson — struck a nerve and scored a megahit in 1983 with the song “Somebody’s Watching Me.” And that was back when people were still using landlines and beepers.
Things have only intensified in today’s Too-Much-Information Age, where just about every device your own is tracking where you go, what you buy, what turns you on and what you think you might be having for dinner.
Related: Analysts update their CrowdStrike stock price after earnings
A survey by the background company Checkr found that nearly three-quarters (73%) of Americans are extremely or moderately concerned about the data they provide online, with Gen Xers and Millennials showing the most concern.
The cybersecurity company CrowdStrike (CRWD) warned in its 2024 Global Threat Report that “the speed and ferocity of cyberattacks continue to accelerate as adversaries compress the time between initial entry, lateral movement and breach.
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“At the same time, the rise of generative AI has the potential to lower the barrier of entry for low-skilled adversaries, making it easier to launch attacks that are more sophisticated and state-of-the-art,” the company said.
George Kurtz, co-founder and CEO of CrowdStrike has defended the company’s response to the July 2024 IT outage. Photographer: Patrick T. Fallon/Bloomberg via Getty Images
CrowdStrike CEO defends response to outage
The people at CrowdStrike might feel as if somebody’s watching them now following the company’s failed software upgrade in July, which knocked computers offline worldwide in what has been called the largest IT outage in history.
Many industries were affected by a faulty update to CrowdStrike’s Falcon Sensor security software, particularly airlines and airports, where travelers endured delays and flight cancellations.
Related: Analysts reboot CrowdStrike stock price targets after lawsuit
Last month, Delta Air Lines (DAL) filed a lawsuit against the software security company, alleging that it caused the massive computer outage, which forced the carrier to cancel more than 7,000 flights.
Some 1.3 million passengers were afffected over five days.
The IT outage will likely cost the Fortune 500, excluding Microsoft (MSFT) , at least $5.4 billion in direct financial losses, according to a report from Parametrix that was released in July.
Delta is seeking reimbursement of more than $500 million, as well as additional money for lost profits, attorney fees, and compensation for “reputational harm and future revenue loss.”
CrowdStrike said Delta’s claims were based “on disproven misinformation, demonstrate a lack of understanding of how modern cybersecurity works, and reflect a desperate attempt to shift blame for its slow recovery away from its failure to modernize its antiquated IT infrastructure.”
In August, George Kurtz, co-founder, president and CEO of CrowdStrike, told analysts during the company’s first earnings call since the outage that the company’s response to the July 19 incident was “immediate, deliberate and focused.”
“We activated CrowdStrike’s crisis response plan to lead through the incident,” Kurtz said. “Our efforts were 100% focused on bringing impacted devices back online with the highest level of speed and transparency.”
Investors seem ready to move on from the incident.
CrowdStrike shares are up nearly 35% since January and the stock has surged almost 66% from a year ago.
The company is scheduled to post third-quarter results on Nov. 26 and several investment firms have issued research notes ahead of the earnings release.
Analyst: outage a dark chapter in CRWD growth story
Wedbush, affirming an outperform rating on CrowdStrike and boosting its price target to $330 from $315, called the company a leading cybersecurity provider with a broad portfolio of offerings.
The investment firm said the company’s “long-term story is still well-intact as customers elevate spending across multiple modules within its Falcon platform despite navigating significant headwinds in the near term as a result of the IT outage.”
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The company’s users continue to adopt the platform, with healthy momentum in cloud, identity and log scale coupled and better-than-expected results in data protection and Charlotte AI, Wedbush said. Charlotte AI is CrowdStrike’s conversational AI assistant for security analysts, the firm said.
Weedbush said that while the company faces headwinds over the next 12 to 18 months due to the IT outage, the firm maintains a positive long-term view. CrowdStrike, it said, “remains the gold standard for cybersecurity, with the outrage only representing a dark chapter for the company in the multiyear growth story.”
Truist raised its price target on Crowdstrike to $375 from $325 and maintained a buy rating as part of a research note previewing Q3 results for the infrastructure and security software sector.
Buyer behavior has stabilized in the sector since last year, and the investment firm is focused on visibility into 2025 when generative AI projects will have a “rubber meets the road” moment, the firm said.
The cost for companies that misstep in execution will be high in the weeks ahead, and the investment firm favors high-quality names going into the print.
Regarding CrowdStrike Truist warned that the near-term will result in temporarily muted upsell dollar values and temporarily higher than typical levels of contraction due to elongated subscription terms in the wake of the global IT outage, TheFly reported.
Morgan Stanley raised the firm’s price target on CrowdStrike to $355 from $325 and kept an overweight rating on the shares.
The firm said that based on the investment firm’s checks, CrowdStrike is “recovering well” from the July outage.
While the stock has nearly returned to preoutage levels sooner than expected, Morgan Stanley said, investor sentiment remains “largely negative.” The investment firm sees further upside after a better-than-expected third-quarter result.
Related: Veteran fund manager sees world of pain coming for stocks
