George Kurtz, Chairman CEO and Co-Founder of CrowdStrike speaks at the WSJTECH live conference in Laguna Beach, California, USA, October 21, 2019.
Mike Blake | Reuters
CrowdStrike Shares fell as much as 13% on Monday morning as the cybersecurity software company continued to help customers across industries recover from an outage that claimed millions Microsoft Windows devices offline last week.
Early Friday, the company issued a flawed update to its Falcon security software that crashed computers, data center computer servers and monitor screens, causing canceled flights and canceled medical appointments. The incident affected 8.5 million Windows devices, less than 1% of the global total, Microsoft said.
IT staff worked quickly to fix the computers. Meanwhile, hackers tried to take advantage of the confusion with the creation malicious websites which seemed to offer software updates. CrowdStrike CEO George Kurtz addressed the situation on air with CNBC’s Jim Cramer.
CrowdStrike shares fell 11% on Friday, but the fallout wasn’t over yet. Over the weekend, people were divided photos on social media Windows devices showing the so-called “blue screen of death,” a sign of computers needing attention from administrators. CrowdStrike said Sunday it is testing a method to patch affected machines faster.
Guggenheim Securities downgraded its rating on CrowdStrike shares to neutral as of Sunday’s market. Analysts led by John DiFucci said the stock still trades at “the highest multiple of recurring revenue in our entire software coverage.”
It may take time for CrowdStrike to repair its image, and the result will likely hurt signatures, the analysts wrote.
“We continue to have the utmost respect for the leadership team at CrowdStrike and believe that the company will ultimately be even stronger as a result of this incident, and if investors have a multi-year horizon, they can ride it out,” they wrote. “However, we find it difficult to tell investors that they should buy CRWD at this time.”
Goldman Sachs maintained a buy rating on shares of CrowdStrike in a note issued early on Monday. But analysts at the investment bank said they expected CrowdStrike’s deals to take longer to close from the time of the shutdown until July 31, when the software company’s second fiscal quarter closes.
“Our recent conversations confirm our view that there will likely be minimal stock changes at the endpoint following this event — although we recognize that additional postmortem details will further inform this view,” wrote analysts led by Gabriela Borges.
They pointed to a 2010 McAfee outage that caused computer crashes to give a sense of what happened before last week’s events. “The revenue impact due to deferrals was approximately $6 million of deferred revenue that was not recognized on the balance sheet and revenue was negatively impacted by another approximately $14 million,” CEO Dave DeWalt told analysts on a conference call. Intel bought the antivirus company in 2011.
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