On Friday, American cybersecurity firm CrowdStrike became widely known for the wrong reasons after a problematic software update caused global disruptions. The company’s stock plummeted by over 11% as the outage led to significant operational disruptions across various sectors, including public services, air travel, and broadcasting. Previously valued at around $83 billion, CrowdStrike is a leading cybersecurity provider with nearly 30,000 global subscribers. The company’s stock had surged over the past year due to its impressive growth and high margins, but Friday’s events led to a sharp decline.
The outage might prompt both customers and investors to reassess their reliance on CrowdStrike, potentially giving rise to competitors such as Palo Alto Networks (PANW.O), whose stock increased by 1.7% on Friday, and SentinelOne (S.N), which saw a rise of up to 3.6%.
Gil Luria, a senior software analyst at D.A. Davidson, commented, “This incident highlights the complexity and interconnectivity of our global computing systems and their vulnerability to errors and mistakes.”
“Although most companies don’t have a viable alternative to Microsoft, they do have other options for security,” he continued. “This incident might lead many organizations to reevaluate their choice of security products and consider diversifying their security solutions to avoid similar outages in the future.”
OUTAGES HAPPEN
Security officials at several companies voiced their frustration with CrowdStrike but did not indicate any intention to sever ties with the vendor, according to someone familiar with the discussions.
Analysts noted that although Friday’s incident was a significant setback for CrowdStrike, they did not anticipate a substantial shift in market share to competitors as a result. Dan Ives, an analyst at Wedbush Securities, acknowledged that the situation was a major blow to CrowdStrike and would likely put pressure on its stock. However, he pointed out that the issue was caused by a technical update rather than a hack or cybersecurity threat, which would have been a more serious concern.
