CrowdStrike Getting A ‘Black Eye’ From Microsoft Outage Meltdown: Analyst

After a defective CrowdStrike software update caused massive impacts to flights, medical services and 911 systems, CrowdStrike will likely take a hit to its strong brand in the cybersecurity market, according to Wedbush Securities’ Daniel Ives.

After CrowdStrike’s Falcon software update caused a Microsoft outage and led to massive impacts to flights, medical services and 911 systems, CrowdStrike will likely take a hit to its strong brand in the cybersecurity market, according to a Wall Street analyst.

Wedbush Securities’ Daniel Ives wrote in a note to investors Friday that cybersecurity giant CrowdStrike will suffer a “black eye” from the incident.

The defective CrowdStrike software update led to a “blue screen of death” for many Windows users and led to massive impacts on real-world services including more than 1,000 flights reportedly cancelled, health care services curtailed and 911 system outages. Microsoft said the outage stemmed from an update to CrowdStrike’s Falcon software.

CrowdStrike said in a statement that a “defect found in a single content update for Windows hosts” had been discovered to be responsible, and “a fix has been deployed.” The outage has not been caused by a cyberattack, the company noted.

In a post on X, CrowdStrike CEO George Kurtz said that “our team is fully mobilized to ensure the security and stability of CrowdStrike customers.”

In his note to investors, Ives, managing director and senior equity research analyst at Wedbush, said that the effects from the outage were unprecedented. The CrowdStrike-Microsoft outage is “impacting businesses, airports, consumers and a ripple impact never seen globally,” he wrote.

“This is clearly a major black eye for CrowdStrike and the stock will be under pressure after this global outage,” Ives wrote, though he noted that that the incident is “importantly not a hack/cyber security threat which would be more worrying.”

CrowdStrike’s stock price was down 9.8 percent Friday to $309.38 a share.

“CrowdStrike has a strong brand and global marketing presence which will need to go into next gear over the coming weeks and months to curtail some damage from this,” Ives wrote.

“Today CrowdStrike becomes a household name but not in a good way and this will take time to settle down but does not change our positive long term view of CrowdStrike or cyber security sector,” he said. “It could create opportunity for some competitive displacements but this will take time to determine the path of CIOs and companies looking ahead and related legal actions related to this outage.”

For Microsoft, Ives wrote, “this is less of an issue.”

“In a nutshell, this is PR nightmare for CrowdStrike and Microsoft and others get caught in this tornado along with millions of people currently stranded at airports around the globe,” he wrote.

CRN has reached out to CrowdStrike for comment.

The outage has led to massive impacts, including widespread flight cancellations. Multiple airlines reportedly asked the Federal Aviation Administration for a full ground stop on flights amid the outage.

Flights from American Airlines, United and Delta were the hardest hit, according to reports. Nearly 1,400 flights have reportedly been canceled globally.

“The FAA is closely monitoring a technical issue impacting IT systems at U.S. airlines,” the FAA said in a post on X. “Several airlines have requested FAA assistance with ground stops until the issue is resolved.”

In a statement posted on X Friday morning, United said that “as we work to fully restore these systems, some flights are resuming. Many customers traveling today may experience delays.”

American Airlines said on X that it was able to “re-establish its operation” as of 5 a.m. EST.

Delta said on X that it “has resumed some flights after a vendor technology issue impacting airlines and businesses globally.”

A number of U.S. hospitals have curtailed services, including elective surgeries and other non-urgent visits Friday as a result of the outage.

Mass General Brigham in Boston said in a post on X that “due to the severity of this issue, all previously scheduled non-urgent surgeries, procedures and medical visits are canceled today.”

Cincinnati Children’s Hospital said on X that “many of our Microsoft-based computer systems have been affected by the worldwide technology outage.”

Health services impacts were also reported in countries including the U.K., Germany and Israel.

Meanwhile, impacts to 911 systems in states including Arizona, New Hampshire and Alaska were reported.