Just don't blame the intern.
That was one response on X, formerly Twitter, to CrowdStrike's (CRWD) July 21 statement after the cybersecurity company's faulty update crashed 8.5 million Microsoft (MSFT) Window devices, resulting in thousands of canceled flights, outages for 911 services, and problems at health care facilities.
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"We understand the profound impact this has had on everyone. We know our customers, partners and their IT teams are working tirelessly and we’re profoundly grateful," CrowdStrike said on X. "We apologize for the disruption this has created. Our focus is clear: to restore every system as soon as possible."
The company said that “a significant number” on Window devices “are back online and operational” and that “we’re making progress by the minute.”
More than 700 flights into, within or out of the U.S. were canceled by 7:30 a.m. ET Monday, and more than 800 flights were delayed, according to the flight tracking site FlightAware.
Microsoft said in a July 20 blogpost that the incident affected less than 1% of all Windows machines.
"While the percentage was small, the broad economic and societal impacts reflect the use of CrowdStrike by enterprises that run many critical services," the software giant said.
Among other steps, Microsoft said it was engaging with CrowdStrike “to automate their work on developing a solution” and deploying hundreds of engineers and experts to work directly with customers to restore services.
CrowdStrike
Analyst notes 'outage heard around the world'
In addition, Microsoft said it was collaborating with other cloud providers and stakeholders, including Google (GOOGL) Cloud Platform and Amazon (AMZN) Web Services, “to share awareness on the state of impact we are each seeing across the industry and inform ongoing conversations with CrowdStrike and customers.”
CrowdStrike shares tumbled 11% on Friday — less than one month after the company was listed on the S&P 500 — and the stock was down nearly 10% to $276.45 at last check.
Meanwhile rival companies like SentinelOne (S) and Palo Alto Networks (PANW) saw their shares rising.
Patrick Anderson, CEO of the research firm Anderson Economic Group, told CNN that the costs of what has been called the largest outage in IT history could easily top $1 billion.
"We are seeing IT outage issues still persist in spots around the globe from the CrowdStrike IT outage heard around the world on Friday," Wedbush analyst Dan Ives said on X. "This is not good news for (CEO) George Kurtz & Co. in an already bad situation as it appears a number of businesses are still finding outage issues."
We are seeing IT outage issues still persist in spots around the globe from the CrowdStrike IT outage heard around the world on Friday. This is not good news for George Kurtz & Co. in an already bad situation as it appears a number of businesses are still finding outage issues 🌎
— Dan Ives (@DivesTech) July 22, 2024
Several analysts responded to the CrowdStrike situation by adjusting their stock price targets and ratings for the company.
Scotiabank analyst Patrick Colville downgraded CrowdStrike to sector perform from outperform and slashed his price target to $300 from $393.
While calling CrowdStrike "a top software company, possibly one of the greatest of all time," Colville said that the firm is stepping aside as it analyzes the impacts on the company's "previously unblemished record" from last week's outage incident.
Although the analyst thinks CrowdStrike's dominance and entrenchment in cybersecurity estates will mean that repercussions on the company should be contained, Colville lowered his Annual Recurring Revenue estimates below Wall Street's forecasts and thinks CrowdStrike shares "could be heavy in 2024."
Meanwhile, analysts at Oppenheimer removed CrowdStrike from the firm's 2024 Top Picks after adding the company to the list In January.
Analyst: Company committed 'cardinal sin'
While Oppenheimer remains positive on the long-term opportunity, it expects shares to face continued pressure near-term as the company deals with the fallout of its defective software update and related global Windows outage.
The firm said it is still too early to tell the impact of the failure on CrowdStrike's business and financial results, but Oppenheimer believes the outage opens the door for sizable fines, lengthy litigation, and pressure on business activity.
Related: CrowdStrike stock tumbles after update triggers global IT chaos
Coupled with a premium valuation, Oppenheimer sees a negative near-term setup for the stock. The firm has an outperform rating on the shares with a price target of $450.
And BTIG downgraded CrowdStrike to neutral from buy with no price target.
Following Friday's global outage, the firm said that it spoke with five senior security executives about the incident and the feedback from the discussions was more negative than it had expected.
While it is not stemming from a security incident, CrowdStrike committed the "cardinal sin" for any security vendor and negatively impacted the revenue generation of its customers, the firm said.
Although BTIG said that it does not see much risk of customers leaving, the firm believes the outage may have an impact on new customer wins and create deal delays.
The firm also thinks customers will ask for bigger discounts on contract renewals and that CrowdStrike will likely need to offer customers some form of credit for the outage.
BTIG said it has reduced its FY25 and FY26 ARR estimates by 1.7% and 2.8% respectively and now sees a balanced risk reward.
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