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On Friday (July 19), US cybersecurity company CrowdStrike became a household name after a botched software update wreaked havoc around the world.
The company’s shares fell more than 11% on Friday as the blackout affected operations across multiple industries – shutting down public services, suspending flights and forcing some broadcasters to go off the air.
CrowdStrike, which once had a market value of about $83 billion, is one of the world’s most popular cybersecurity providers, with nearly 30,000 users worldwide. The company has been a software darling for investors due to its rapid growth and high profit margins. Before Friday’s stock price plunge, its stock price had doubled in the past year.
But the outage could force customers and investors to rethink their reliance on the company, opening the door to potential competitors such as Palo Alto Networks (PANW.O) , whose shares rose 1.7% on Friday, and SentinelOne (SN) , which rose as much as 3.6%.
“This incident is a reminder of how complex and intertwined our global computing systems are, and how vulnerable they are to errors and missteps,” said Gil Luria, senior software analyst at DA Davidson.
“While most companies don’t actually have an alternative to Microsoft, they do have alternatives in security,” he added.
“This may cause many companies to rethink which security products they use and whether they need to diversify between different security products to prevent this type of outage.”
“Power outages happen.”
Security officials at various companies expressed dissatisfaction with CrowdStrike but did not disclose plans to stop working with the vendor, according to a person familiar with the conversations.
Analysts said that while Friday’s incident hurt CrowdStrike, they did not expect competitors to lose much market share as a result of it.
“This is obviously a big shame for CrowdStrike and its stock price will be under pressure,” said Dan Ives, an analyst at Wedbush Securities. But he noted that the incident stemmed from a technology update rather than a hack or cybersecurity threat, which he said was “more concerning.”
Analysts at JPMorgan said customers may be initially upset but the company has taken responsibility for the problem.
CrowdStrike CEO George Kurtz posted on social media platform X that the incident was not a security incident or cyberattack and that fixes had been deployed. He later apologized for the impact on the company.
“Disruptions happen and can be large, but we think CrowdStrike’s proactive guidance and efficient response will help,” said analysts at JPMorgan.
Ben Bernstein, a former cybersecurity investor who now heads security startup Gusto, said he plans to continue investing in CrowdStrike for now.
“You generally want to go to the larger firms because their processes are probably better. It depends on the specific company and people’s interactions with those companies and whether they feel they are trustworthy,” Bernstein said.
Read more by Euractiv
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