What’s Next for CrowdStrike After Causing the Worst IT Outage in History?
Who foots the bill in the aftermath when a company accidentally takes down a significant portion of the world’s tech infrastructure? And who will continue to do business with them afterward? That’s one question facing CrowdStrike — which was responsible for the largest IT outage ever. Since last Friday, has dropped 23%, prompting analysts to lower their ratings and price targets. With its reputation now tainted, investors are concerned about whether CrowdStrike can retain its current customers and convince new ones to sign up.
- Wedbush Securities’ Dan Ives predicts the company might lose 5% of its users — allowing competitors like Palo Alto Networks and SentinelOne an opportunity to gain market share.
- Researcher James Lewis penned the total cost of the outage at $1B, approaching the company’s $3B in total sales in FY2024 — but it’s unclear if CrowdStrike will be held liable, as Lewis expects them to be protected by contracts.
Slippery slope: On top of all this, analysts are also concerned about how pricey CrowdStrike’s stock has become. It’s jumped 75% in the past year, while the broader cybersecurity sector, tracked by the Global X Cybersecurity ETF, has only seen a 21% increase This sharp rise has pushed CrowdStrike’s price-to-sales and price-to-earnings ratios through the roof — 28x and ~485, respectively, ahead of the incident — making it significantly richer than similar firms in the Nasdaq-100, who have much lower ratios of 5.4x P/S and 33.2x P/E.
