CrowdStrike Stock Tanks 15%, Set For Worst Day Since 2022

Shares of cybersecurity company CrowdStrike Holdings dropped 15% on Friday after the company's software update resulted in what may turn out to be the largest IT outage ever. CrowdStrike stock "is on pace for its steepest daily loss since November 2022 and its $290 low share price is the lowest intraday mark since April 25," reports Forbes. "CrowdStrike is on track for the third-worst day in its five-year history as a publicly traded company." From the report: Microsoft, which was swept up in the outage as the downed systems are those running CrowdStrike's cybersecurity applications and Microsoft's Windows software, also slumped, with its shares down about 1% to the $3.2 trillion behemoth's lowest share price since June 11. CrowdStrike competitor Palo Alto Networks enjoyed a 4% rally Friday, while the tech-heavy Nasdaq Composite stock index gained about 0.2%, held up by the likes of Microsoft rival Apple's 1% stock gain and a 1% rise for shares of Alphabet, which is reportedly in talks to buy cybersecurity firm Wiz for $23 billion. The CrowdStrike selloff is "an overreaction to a temporary setback," Rosenblatt analyst Catharine Trebnick wrote in a note to clients Friday. It's a "compelling buying opportunity" as it "creates a window for investors to buy into a high-quality, growth-oriented cybersecurity company at a discounted valuation," Trebnick continued. To her point, CrowdStrike stock's relative valuation, according to its price-to-earnings ratio (P/E), which compares its market value to its projected profits over the next four quarters, fell Friday to its lowest number since April. Still, CrowdStrike's P/E of about 70 is very high for a company of its size, meaning investors will need to express significant confidence in the business' ability to grow earnings, a challenge if Friday's incident were to impact CrowdStrike's client base.

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