Shares of CrowdStrike (CRWD.O) plummeted over 4% in premarket trading on Tuesday following a report that Delta Air Lines (DAL.N) plans to seek compensation from the cybersecurity firm due to a recent global IT outage that disrupted multiple industries, including airlines.
The cyber outage, which occurred on July 19, resulted in the cancellation of more than 2,200 flights. Since then, Delta has canceled over 6,000 flights, causing significant operational and financial setbacks.
According to reports, CrowdStrike’s “Falcon Sensor” software was responsible for causing Microsoft Windows to crash, displaying the notorious “Blue Screen of Death.” As a result, Delta has engaged a law firm and is also pursuing compensation from Microsoft (MSFT.O), as reported by CNBC on Monday.
CrowdStrike’s stock, which had experienced a robust performance in 2023, more than doubling in value, has since tumbled over 24% following the outage. This decline has led to a loss of over $20 billion in market valuation.
A recent survey by Evercore ISI revealed that many of CrowdStrike’s clients are now reconsidering their spending on the company and are expecting pricing concessions. “Nearly everyone agreed that they expect some form of monetary relief, such as discounts, service revenue credits, or free products,” the brokerage noted in a report on Tuesday. It also mentioned that feedback from clients indicated that CrowdStrike was already engaging in discussions about possible compensations.
Analysts at Needham highlighted that the damages from the outage have resulted in “hindered customer willingness to rely heavily on singular platforms, as that choice introduces concentration risk.” The brokerage further mentioned that the CrowdStrike customers it interviewed expressed frustration over the outage, describing it as a “total nightmare” that disrupted their businesses during one of the year’s busiest travel and shopping periods.
CrowdStrike is likely to face increased scrutiny and pressure to provide solutions and compensations to its affected clients, while striving to regain trust and stability in the market.