A program update from cybersecurity firm CrowdStrike early Friday triggered major IT outages worldwide. The loss of service disrupted business operations for many airlines, banks, hospitals, telecommunications providers and more. Key services for Microsoft and Amazon were also down. CRWD stock tumbled amid the outage. Still, analysts say their long-term outlook remains unchanged.
CrowdStrike on Friday said a defect in a single content update for Windows hosts caused the problem. The company said it was not a security incident or a cyberattack. Mac and Linux hosts were not impacted by the defect.
CrowdStrike identified the issue and deployed an isolated fix to resolve the problem, CEO George Kurtz posted online at 5:45 a.m. ET. The company in a 9:22 a.m. ET update said that it reverted the changes related to the issue.
CrowdStrike will continue to post updates in the support portal.
Analyst Views On CrowdStrike Outage
"This is clearly a major black eye for CrowdStrike and the stock will be under pressure after this global outage related to Microsoft has caused disruption globally," Wedbush analyst Dan Ives wrote in a Friday note. Luckily, it was a technical update and not a hack, which would be more worrying, the analysts wrote.
Ives said that CrowdStrike will need to ramp up marketing in the coming weeks and months to curtail PR damage cause by the outage.
"Today CrowdStrike becomes a household name but not in a good way and this will take some time to settle down," Ives said in the note. However, it does not change Ives' long-term view of CrowdStrike or the cybersecurity sector. The CrowdStrike outage could create opportunities for some competitive displacements, but it will take time to determine the path ahead for many companies, as well as legal action related to the outage.
"In a nutshell, this is PR nightmare for CrowdStrike, and Microsoft and others will get caught in this tornado along with millions of people currently stranded at airports around the globe," Ives wrote.
CrowdStrike Outage Hits Airlines, Global Travel; New York Stock Exchange Fully Operational
Separately, Oppenheimer wrote that the CrowdStrike outage turned its near- and midterm view on the company negative. The firm expects business activity to be impacted via delayed purchases, customer attrition and slower upsell.
"This is a major blow to CrowdStrike's reputation and would most likely weigh not only on investor sentiment but also on business activity for several quarters ahead," Oppenheimer wrote. "We expect the company to not only take immediate action to resolve the specific failure but also to review its internal processes transparently to raise customer and investor confidence."
Oppenheimer noted that other companies worked through similar issues in the past, citing Microsoft and Okta as examples. The firm expects Palo Alto, Microsoft, SentinelOne to indirectly benefit from the CrowdStrike outage. Fortinet, Check Point and Cisco will also see indirect boosts, but to a lesser degree.
Oppenheimer maintained its outperform rating and 450 price target on the stock.
Major Outages
As of 9 a.m. ET, there were 20,465 delayed flights with 1,831 cancellations, according to tracking site FlightAware. Delta had 329 flights cancelled with 194 delayed. American Airlines saw 279 cancellations and 211 delays. United canceled 142 flights and delayed another 164 trips.
Outage site Downdetector also reported issues with many major services. TD Bank, Visa, ADP, Bank of America, Charles Schwab, Starbucks, Google, Zoom and Verizon were among those with spikes in outages.
Elsewhere, Tesla, SpaceX and X CEO Elon Musk on Friday said "We just deleted CrowdStrike from all our systems," in a social media post. Musk did not elaborate if it was for one or all of his companies.
Affected Stocks
Still, the IT disruptions caused little direct impact on stocks. While CRWD took a big hit, most other major moves among Dow, S&P 500 and Nasdaq 10 stocks were related to earnings reports.
CrowdStrike stock pared losses to 11.1% Friday. CRWD stock plummeted 17.5% in early trade amid the outage.
Microsoft and Amazon stock ticked down a fraction. Palo Alto shares swung 2.2% higher.
United Airlines reversed to a 3.3% gain Friday after slumping in early trade amid flight disruptions. Delta also rebounded for a 1.2% advance. American Airlines eased slightly.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
