Topline
Shares of cybersecurity company CrowdStrike Holdings faltered Friday after the firmâs software update caused global outages in technology across airlines, hospitals, emergency services and more businesses, sending CrowdStrike to one of its worst ever days on the stock market.
A screen at an airport displays a “blue screen of death” following CrowdStrike’s ill-fated software … [+]
Key Facts
Down about 15% shortly after market open, CrowdStrike stock is on pace for its steepest daily loss since November 2022 and its $290 low share price is the lowest intraday mark since April 25.
CrowdStrike is on track for the third-worst day in its five-year history as a publicly traded company.
Microsoft, which was swept up in the outage as the downed systems are those running CrowdStrikeâs cybersecurity applications and Microsoftâs Windows software, also slumped, with its shares down about 1% to the $3.2 trillion behemothâs lowest share price since June 11.
CrowdStrike competitor Palo Alto Networks enjoyed a 4% rally Friday, while the tech-heavy Nasdaq Composite stock index gained about 0.2%, held up by the likes of Microsoft rival Appleâs 1% stock gain and a 1% rise for shares of Alphabet, which is reportedly in talks to buy cybersecurity firm Wiz for $23 billion.
See here for Forbesâ full coverage on the outage.
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Chief Critic
The CrowdStrike selloff is an âan overreaction to a temporary setback,â Rosenblatt analyst Catharine Trebnick wrote in a note to clients Friday. Itâs a âcompelling buying opportunityâ as it âcreates a window for investors to buy into a high-quality, growth-oriented cybersecurity company at a discounted valuation,â Trebnick continued. To her point, CrowdStrike stockâs relative valuation, according to its price-to-earnings ratio (P/E), which compares its market value to its projected profits over the next four quarters, fell Friday to its lowest number since April. Still, CrowdStrikeâs P/E of about 70 is very high for a company of its size, meaning investors will need to express significant confidence in the businessâ ability to grow earnings, a challenge if Fridayâs incident were to impact CrowdStrikeâs client base.
Key Background
âThis will be the largest IT outage in history,â declared cybersecurity expert Troy Hunt, with the disruption impacting every corner of society, including the cancellation of more than 1,200 American commercial flights, issues at 911 call centers in multiple states and hiccups in financial market trading. CrowdStrike, which sells cloud-based solutions to businesses to protect their networks from cyberattacks, may not have previously been a household name, but its $83 billion market value at Thursdayâs close made it the 109th-largest American public company, bigger than the likes of CVS, FedEx and Target, making the key leap onto the S&P 500 index last month. Investors piled into CrowdStrike as part of the broader rally on generative artificial intelligence buzz , with shares still up more than 200% dating back to the end of 2022.
Further Reading
