CrowdStrike (NASDAQ:CRWD) stock plunged over 12% overnight after a major outage of its cybersecurity system caused worldwide business disruptions.
CEO George Kurtz said that “a defect found in a single content update for Windows hosts” caused the problem. Linux and Mac hosts are not impacted.
CRWD stock traded for under $300 per share before the market opened this morning. Although its market capitalization fell to $73 billion, the stock has remained up about 17% for 2024. Microsoft (NASDAQ:MSFT) stock was down 1.45%, losing over $50 billion in market cap overnight.
A Bug and Not a Hack
That these global problems were caused by a failed software update may be the most shocking part of the story.
Major news services like CNN were offering the kind of live updates usually reserved for natural disasters and political crises.
Airlines, banks, and hospitals worldwide were all hit. The Associated Press reported over 100 flights were canceled at New York airports. ABC News headlined the result as “global chaos.”
Systems impacted faced a notice that their copies of Windows didn’t load correctly. The problem is called the “Blue Screen of Death.” The Verge reported the cause as an update to the kernel-level driver CrowdStrike uses to secure Windows machines.
Crowdstrike pulled its update after reports of outages, but that didn’t provide a fix for systems that were already down. Crowdstrike told customers to reboot affected machines into safe mode and navigate to the Crowdstrike directory to delete a system file.
The outage struck at the core of Crowdstrike’s business model, protecting connections between servers and the devices workers use. The short-term result should be the worst day in history for Crowdstrike stock.
CRWD Stock: What Happens Next?
Expect quick jumps in the price of Crowdstrike rivals like Palo Alto Networks (NASDAQ:PANW), Sentinel One (NYSE:S), and Cloudflare (NYSE:NET). It’s possible Crowdstrike stock may recover quickly once it hits a sustainable low.
As of this writing, Dana Blankenhorn had a LONG position in MSFT and PANW. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
