CrowdStrike Stock Tanks 15%—CRWD Set For Worst Day In Years

Topline

Shares of cybersecurity company CrowdStrike Holdings faltered Friday after the firm’s software update caused global outages in technology across airlines, hospitals, emergency services and more businesses, sending CrowdStrike to one of its worst ever days on the stock market.

A screen at an airport displays a “blue screen of death” following CrowdStrike’s ill-fated software … [+] update.

Europa Press via Getty Images

Key Facts

Down about 15% shortly after market open, CrowdStrike stock is on pace for its steepest daily loss since November 2022 and its $290 low share price is the lowest intraday mark since April 25.

CrowdStrike is on track for the third-worst day in its five-year history as a publicly traded company.

Microsoft, which was swept up in the outage as the downed systems are those running CrowdStrike’s cybersecurity applications and Microsoft’s Windows software, also slumped, with its shares down about 1% to the $3.2 trillion behemoth’s lowest share price since June 11.

CrowdStrike competitor Palo Alto Networks enjoyed a 4% rally Friday, while the tech-heavy Nasdaq Composite stock index gained about 0.2%, held up by the likes of Microsoft rival Apple’s 1% stock gain and a 1% rise for shares of Alphabet, which is reportedly in talks to buy cybersecurity firm Wiz for $23 billion.

See here for Forbes’ full coverage on the outage.

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Chief Critic

The CrowdStrike selloff is an “an overreaction to a temporary setback,” Rosenblatt analyst Catharine Trebnick wrote in a note to clients Friday. It’s a “compelling buying opportunity” as it “creates a window for investors to buy into a high-quality, growth-oriented cybersecurity company at a discounted valuation,” Trebnick continued. To her point, CrowdStrike stock’s relative valuation, according to its price-to-earnings ratio (P/E), which compares its market value to its projected profits over the next four quarters, fell Friday to its lowest number since April. Still, CrowdStrike’s P/E of about 70 is very high for a company of its size, meaning investors will need to express significant confidence in the business’ ability to grow earnings, a challenge if Friday’s incident were to impact CrowdStrike’s client base.

Key Background

“This will be the largest IT outage in history,” declared cybersecurity expert Troy Hunt, with the disruption impacting every corner of society, including the cancellation of more than 1,200 American commercial flights, issues at 911 call centers in multiple states and hiccups in financial market trading. CrowdStrike, which sells cloud-based solutions to businesses to protect their networks from cyberattacks, may not have previously been a household name, but its $83 billion market value at Thursday’s close made it the 109th-largest American public company, bigger than the likes of CVS, FedEx and Target, making the key leap onto the S&P 500 index last month. Investors piled into CrowdStrike as part of the broader rally on generative artificial intelligence buzz , with shares still up more than 200% dating back to the end of 2022.