CrowdStrike (CRWD +0.61%) stock is plummeting in Friday's trading. The cybersecurity specialist's share price was down 8.5% as of 11 a.m. ET, according to data from S&P Global Market Intelligence. Shares had been down as much as 15.4% earlier in the daily session.
NASDAQ: CRWD
Key Data Points
With a new update that it rolled out, CrowdStrike inadvertently triggered system locks for hardware using Microsoft's Windows operating system. The issue has caused massive global outages for information technology systems, and investors are dumping the company's stock in response.
CrowdStrike accidentally triggered a massive global IT outage
CrowdStrike is a leading provider of cloud-based endpoint protection services for businesses and institutions. The company's platform helps prevent computers, mobile devices, servers, and other hardware from being used by cybercriminals to attack networks and is widely used. Unfortunately, the latest update for its deeply integrated cybersecurity software has caused widespread outages for Windows-based computer systems.
While CrowdStrike is far from the first cybersecurity company to suffer a big setback, the recent outage is notable in its scale. The issue has impacted hundreds of millions of computers around the world and made it impossible for many hospitals, airlines, stores, and other businesses to operate normally.
What comes next for CrowdStrike stock?
With today's big pullback, CrowdStrike stock is now down roughly 20% from its high. On the other hand, the stock is still up roughly 20% year to date and 101% over the last year.
Prior to the outage, CrowdStrike had been on a massive winning streak. The company's AI-powered cybersecurity platform had been attracting new customers and increased spending from existing clients at an impressive pace. With its last quarterly report, the company delivered a 33% sales increase and a 63% jump for non-GAAP (adjusted) earnings per share.
The widespread service crash and related issues could make it more difficult for CrowdStrike to attract new customers and build relationships with those that are already using its services. It's also possible that the outage could expose the company to some legal liability. But the company's services have otherwise been held in high regard, and the entrenched nature of its platform and high switching costs could help minimize competitive pressures.
For long-term investors, the recent pullback on the stock could actually present a worthwhile buying opportunity. CrowdStrike's near-term brand management and financial performance will likely be viewed through a lens heavily shaped by the massive outage, but there's a good chance that the company will be able to weather these challenges.
