Shares of CrowdStrike (CRWD.O) plunged 13% on Monday, extending their loss-making streak, after Wall Street analysts downgraded the stock on concerns over the financial fallout from a global cyber outage last week.
CrowdStrikeâs glitchy update to its security software crashed computers powered by Microsoftâs Windows operating system, disrupting internet services across the globe and affecting a broad swathe of industries including airlines, banking and healthcare.
Microsoft said on Saturday that about 8.5 million Windows devices, or less than 1% of all Windows machines, were affected.
While analysts largely expect CrowdStrike to recover from the incident given its leading position in the industry, concerns around reputational damage, a hit to new customer contracts, competition and possible legal tussles remain.
âWe donât believe it will materially affect renewals, at least not in the short term ⊠However, we do think this will at least delay deal signings, if not cause some losses in closely contested deals,â Guggenheim analysts said on Sunday.
Meanwhile, rival SentinelOneâs (S.N), opened new tab shares surged 11% on Monday, with J.P. Morgan calling the company âthe most obvious beneficiaryâ of what analysts say is the widest IT outage in modern history.
There was a non-zero chance that legal battles will be fought after CrowdStrikeâs customers get their systems up and running again, Bernstein analyst Peter Weed said.
Services across industries gradually came back online later on Friday but firms were dealing with backlogs, delays and even canceled flights, raising questions on how to avoid such a situation in the future and whether such critical software should remain in the hands of a few companies.
CrowdStrikeâs shares were trading at $265.24 on Monday, following an 11% drop on Friday. At least six brokerages cut their price targets on CrowdStrike, with two more downgrading the stockâs rating to âneutralâ from âbuyâ.
âThe globally disruptive nature of this event will likely have an impact on CrowdStrikeâs financial and operational performance⊠Time spent on damage control is time spent on not selling,â J.P. Morgan analysts said.