CrowdStrike’s stock falls further as it draws downgrades in wake of incident falls further as it draws downgrades in wake of incident
July 23, 2024 2024-07-23 5:27CrowdStrike’s stock falls further as it draws downgrades in wake of incident falls further as it draws downgrades in wake of incident
CrowdStrike’s stock falls further as it draws downgrades in wake of incident falls further as it draws downgrades in wake of incident
Introduction: CrowdStrike’s stock
Analysts fear that the outage caused by CrowdStrike’s software update could lead to new
delays in trading. Shares continued to fall as the company continued to revolutionize
global technology and at least two analysts downgraded the stock.

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“The global disruption caused by CrowdStrike is likely to have a negative,
even temporary, impact on the company’s business,”
John DeFucci of the Guggenheim Museum said in a note to clients.
: “Dust takes time to settle.”
Population strike stocks CRWD -13.46%
After falling 11 percent on Friday, the stock fell another 13 percent in
afternoon trading on Monday as the market digested the lingering impact of the incident.
For example, Delta Air Lines’ DAL flight cancellations continue until Monday.
“Reputation may take longer to recover and is likely
to impact new business,
at least in the short term,” DiFucci continued.
Although he believed that the reputation effect was unlikely to have a significant
impact on contract renewals in the short term, he feared that “at least”
some new contracts would be delayed.
CrowdStrike could lose a “close” deal because of the incident, he said.
CrowdStrike on Friday blamed the content update for widespread
disruptions to Windows-based systems.
Analysts worry that bugs caused by CrowdStrike’s software updates could delay new deals.
The role of cyber security.
Guggenheim’s John DiFucci downgraded the stock from buy to neutral in a note to clients,
saying “the global disruption caused by CrowdStrike
could have a negative impact on the business,
even if only temporarily.
“The dust needs time to settle.”
Share it with CrowdStrike CRWD -13.46%
Shares fell another 13% on Monday afternoon, after falling 11% on Friday,
as the market recognized the ongoing impact of the incident. For example,
Delta Air Lines Inc.’s DAL flights. canceled until monday.
“Reputation recovery may take longer and may at the very least impact new business contracts,
” DiFusi continued. While it expects the reputational damage to have a
significant impact on contract renewals, the company fears that
“at least” some new contracts will be delayed.
potential for CrowdStrike to lose “very competitive”
There’s also the potential for CrowdStrike to lose “very competitive”
business as a result of the incident, he said. On Friday,
CrowdStrike blamed a content update for widespread outages on Windows-based systems.
Downgrading BTIG’s Gray Powell, he said “the ban could impact the
acquisition of new customers and lead to contract delays”.
He said he spoke to five senior security officials after the incident
and received more negative feedback than he expected.
“While this was not due to a security incident (which is a good thing),
it was a ‘capital offense’ for all security providers and negatively impacted
their customers’ bottom line,” Powell continued. He noted that existing customers can
demand heavy discounts on contract renewals and apply for loans to cover lost business.
Powell downgraded the stock to neutral.
Guggenheim’s Mr. DiFucci said that even before the incident,
CrowdStrike’s consensus forecast for the January quarter
he had seen risks to CrowdStrike’s consensus forecast for the January quarter,
particularly around annual recurring revenue. Additionally, he noted that despite
CrowdStrike’s 11% decline on Friday, the stock is still the most expensive
stock in its software coverage based on enterprise value relative to recurring revenue.
We continue to have the utmost respect for CrowdStrike’s management
team and believe the company will ultimately emerge stronger from this incident.
We believe investors should have a multi-year horizon.
“But we have a hard time telling investors they should buy [CrowdStrike] now,” he wrote.
Other analysts suggested late last week that investors may be buying stocks at low prices.
Read more: Should you buy CrowdStrike shares now? This could be a “one-time sale”.
“CrowdStrike remains focused on restoring all systems as quickly as possible,”
the company tweeted on Sunday. “Of the approximately 8.5 million Windows devices affected,
a significant proportion are back online and operational.”
Read: Delta Air Lines cancellation extended to 4th day
De Fucci noted that the CrowdStrike incident also raises questions about
the broader world of software. For example, he noted the possibility of a
“negative impact” on consumer-based software companies like Snowflake. Snow 1.00%
Due to the general operational disruption on Friday, Datadog Inc.
DDOG. He also wondered whether the incident would make companies and investors think about AI.