Shares of CrowdStrike fell by 13% on Monday, continuing their losing streak, following Wall Street analysts' downgrade of the stock due to concerns about the financial impact from a global cyber outage last week.
CrowdStrike's problematic update to its security software caused crashes on computers using Microsoft's Windows operating system, leading to widespread internet service disruptions and affecting numerous industries such as airlines, banking, and healthcare. Microsoft reported on Saturday that approximately 8.5 million Windows devices, less than 1% of all Windows machines, were impacted. Although analysts generally believe CrowdStrike will recover due to its strong industry position, issues such as potential reputational damage, difficulties in acquiring new customers, increased competition, and possible legal disputes persist.
"We do not anticipate this will significantly impact renewals, at least in the short term... However, we believe it could delay contract signings and potentially lead to losses in closely contested deals," stated Guggenheim analysts on Sunday. In contrast, SentinelOne's shares rose by 11% on Monday, with J.P. Morgan labeling the company as "the most apparent beneficiary" of what analysts describe as the largest IT outage in modern history.
Bernstein analyst Peter Weed noted that there was a possibility of legal conflicts once CrowdStrike's customers restore their systems. Although services across various industries gradually resumed on Friday, companies faced backlogs, delays, and even canceled flights, prompting discussions on how to prevent such incidents in the future and whether critical software should be controlled by fewer companies.
CrowdStrike's shares were trading at $265.24 on Monday, after a 11% drop on Friday. At least six brokerages reduced their price targets for CrowdStrike, with two further downgrading the stock's rating from "buy" to "neutral". "The global disruption caused by this event is likely to affect CrowdStrike's financial and operational performance... Time spent on damage control is time not spent on selling," commented J.P. Morgan analysts.
