CrowdStrike down after report Delta Air to seek compensation over IT outage
Technology
Delta has hired a law firm and will also seek compensation from Microsoft
(Reuters) - Shares of CrowdStrike fell more than 8% on Tuesday after a report Delta Air Lines will seek compensation from the cybersecurity firm over the recent global IT outage that crippled industries including airlines.
The cyber outage led to more than 2,200 flight cancellations on July 19 and Delta has canceled over 6,000 flights so far since then. CrowdStrike's "Falcon Sensor" software had caused Microsoft Windows to crash and display a blue screen, known informally as the "Blue Screen of Death".
Delta has hired a law firm and will also seek compensation from Microsoft, CNBC reported on Monday.
CrowdStrike's stock, which had more than doubled in 2023, has fallen over 24% since the outage, leading to a loss of over $20 billion in market valuation.
Many clients are considering slowing or pausing spending on CrowdStrike and expecting pricing concession, according to a survey by Evercore ISI.
"Nearly everyone agreed that they expect some form of monetary relief, such as discounts, service revenue credits, or free products," the brokerage said in a note on Tuesday, adding that feedbacks from clients suggest that CrowdStrike was already discussing this with its customers.
Analysts at Needham said damages from the outage will lead to "hindered customer willingness to rely heavily on singular platforms, as that choice introduces concentration risk."
The brokerage said that CrowdStrike customers it spoke to displayed frustration over the outage, depicting it as a "total nightmare" disrupting their business during one of the year's busiest travel and shopping periods.
