Crowdstrike stock punished for global IT crash
As millions of people around the world grapple with a massive IT failure, a previously little-known American company is a household name for all the wrong reasons.
19th July 2024 14:57
by Lee Wild from interactive investor
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It’s a cybersecurity expert that seeks to protect people from villains, and whose stock price has more than doubled in the past 12 months, but CrowdStrike Holdings Inc Class A (NASDAQ:CRWD) has inadvertently managed to upset an entire planet with a software update that crashed IT systems worldwide.
Microsoft blamed the issue on “an update from a third-party software platform” - Crowdstrike. The update, which affected Microsoft Windows devices, has brought down systems at many banks, airlines, businesses and even hospitals including the NHS.
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It’s unclear quite what the financial impact on the global economy might be, but it undoubtedly stretches to billions of dollars. Outside today’s share price crash, the implications for Crowdstrike, a company worth over $83 billion before the incident, are unclear.
Crowdstrike chief executive George Kurtz told NBC the company has “resolved the issue,” but said it could be “some time” before all those affected are back up and running.
Crowdstrike stock was down almost 20% in pre-market trading, wiping at least $13 billion off the value of the business. However, losses had narrowed to just 10% ahead of the market open and the price sits just above $300 at the start of official trading.
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The company was founded in California in 2011 and floated on the New York Stock Exchange in 2019. The shares began trading at $64 and dipped just below $40 in March the following year. They hit a record high earlier this month at almost $400.
“Technology investment trusts Allianz Technology Trust Ord (LSE:ATT) and Polar Capital Technology Ord (LSE:PCT) both hold Crowdstrike as part of their allocation to cybersecurity stocks,” says ii’s funds and investment education editor Kyle Caldwell.
Allianz Technology’s annual results for 2023 show that Crowdstrike was its 18th biggest holding. Polar Capital Technology’s annual results to the end of April, released this week, had Crowdstrike as its 11th biggest holding. Latest data to the end of April shows the stake worth over £74 million.
Ben Rogoff, fund manager at Polar Capital Technology, pointed out: “Over the past circa three years [Crowdstrike] has grown revenues from $1.1 billion to $2.9 billion while expanding operating margins from 10% to 19%.”
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