CrowdStrike makes software that helps companies manage their security in IT environments.
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Cyber security company CrowdStrike saw its shares sink on Friday after an update led to a major shutdown, affecting businesses around the world.
Shares of the company, which makes software to help companies manage security in IT environments, opened up more than 14 percent and closed up about 11 percent.
Speaking about the incident on Friday morning, CrowdStrike CEO George Kurtz said the problems were caused by “a flaw found in a content update for Windows hosts.”
“This is not a security incident or cyber attack. The issue has been identified, isolated and a fix has been developed,” Kurts said said in a post on the X social networking platform.
Microsoftwhich also reported issues affecting Azure cloud services and the Microsoft 365 application suite, closed down 0.74%.
Scores of different websites crashed on Friday morning as planes grounded and television studios stopped broadcasting amid an ongoing major IT outage.
Earlier on Friday, CrowdStrike experienced a major outage caused by a problem with an update affecting its Falcon Sensor product, which is designed to stop cyber breaches using cloud technology. CrowdStrike is now in the process of rolling back the update globally.
“CrowdStrike is aware of reports of errors on Windows hosts related to the Falcon sensor,” CrowdStrike told NBC News in a recorded phone message.
Cybersecurity experts said the update issue in CrowdStrike was responsible for the immediate impact on Windows systems around the world, with laptops displaying an error screen known as the “blue screen of death”.
It comes after Microsoft said earlier on Friday that its cloud services were mostly restored after an outage that affected its cloud applications in the US. It is unclear if this outage was connected to the CrowdStrike update.
The global outage shows how a single point of failure in the cyber supply chain can be responsible for massive ripple effects worldwide.
CrowdStrike’s pain is other cyber stocks’ gain
CrowdStrike has been a winner among cyber stocks over the past year, with its shares up nearly 118% over the past 12 months.
Some analysts had raised questions about CrowdStrike’s high valuation — the company was valued at $83.5 billion as of Thursday’s close. Nina Marques, an analyst at Redburn Atlantic, said this week that the company faces challenges competing with other cyber companies in the very large enterprise market.
“CrowdStrike’s strength in the endpoint protection market has long supported its premium valuation compared to peers,” Marques said in a research note on Thursday.
“While we do not question the quality and performance of CrowdStrike’s products, we expect challenges for the company penetrating the very large enterprise market to maximize cross-sell opportunities enough to offset the deflationary effects.”
The research firm downgraded CrowdStrike stock to a “sell” on Thursday and cut its price target for the stock to $275, down from $380 — a 28% decline.
As CrowdStrike saw its stock fall on Friday, other cybersecurity vendors benefited, likely on the backs of investors betting that business might move away from CrowdStrike and flock to rival firms.
Shares of Palo Alto rose 1.3% after previous highs, while Fortinet rose 1.6% in premarket trading. Zscaler and Cloudflare both rose about 1% each in premarket trading.
— CNBC’s Arjun Kharpal contributed to this report