Unprecedented IT disaster "stocks to cry over and stocks to laugh at"!? CrowdStrike, Microsoft, Palo Alto
Occurred on July 19tha large-scale system failurecaused massive disruption worldwide. Ironically, this time's failure was not due to a cyber attack, but was caused by a cybersecurity company that provides services to protect companies from cyber attacks. The industry leader $CrowdStrike (CRWD.US)$The inconvenience of software updates for Windows hosts by the company led to a global IT failure.
CrowdStrike shares plummeted 11% on the 19th.Developing and selling Windows software. $Microsoft (MSFT.US)$Is.Temporary 2% decrease.On the other hand, a competitor of CrowdStrike. $Palo Alto Networks (PANW.US)$Is.Increased by 2%.Small-cap $SentinelOne (S.US)$Is.rose by 8%.This time, in an unprecedented IT disaster, "companies to cry over and companies to laugh over" Regarding, checking the impact and outlook.Said.
CrowdStrike shares plummeted 11% on the 19th.Developing and selling Windows software. $Microsoft (MSFT.US)$Is.Temporary 2% decrease.On the other hand, a competitor of CrowdStrike. $Palo Alto Networks (PANW.US)$Is.Increased by 2%.Small-cap $SentinelOne (S.US)$Is.rose by 8%.This time, in an unprecedented IT disaster, "companies to cry over and companies to laugh over" Regarding, checking the impact and outlook.Said.
◆Company Overview
Leading cybersecurity company. 15 out of the top 20 banks worldwide and 65 out of the Fortune 100 companies use their products and services. According to the research firm Gartner, the company's market share in the security software market (based on revenue in 2023) is 15% (2023), ranking second after the market leader Microsoft (40%). The company also utilizes AI in cybersecurity, announcing a strategic partnership with Nvidia in March this year. Just announced better-than-expected earnings on June 4th.
◆Incident Background
On July 19, CrowdStrike released a sensor configuration update for Windows systems, causing system crashes due to errors. According to Microsoft, approximately 8.5 million Windows devices were affected. The CEO of CrowdStrike stated in a press release, 'This is neither a security incident nor a cyber attack. The issue has been identified, isolated, and a fix has been distributed.' The sensor configuration update causing system crashes was corrected about an hour and a half later. By the 21st, the majority of the 8.5 million affected devices had been restored.
Impact of the Incident
1) Impact on cash flow and performance due to compensation, etc.
This incident affected aviation and banking systems, causing delays in over 0.02 million flights. There may be claims for economic losses against the company in the future.
2) Possibility of some companies hesitating to use the company's products for a while
For example, on July 20, Tesla's CEO Elon Musk posted on social media that 'We are in the process of removing CrowdStrike from all systems.' While not every company will follow suit, if more companies take similar measures, it could potentially impact short to medium-term performance.
3) Potential Impact on Brand Strength
This incident is not a cyber attack, but a problem that occurred during the company's software update, which could potentially have a negative impact on the brand image the company has built up.
On July 19, CrowdStrike released a sensor configuration update for Windows systems, causing system crashes due to errors. According to Microsoft, approximately 8.5 million Windows devices were affected. The CEO of CrowdStrike stated in a press release, 'This is neither a security incident nor a cyber attack. The issue has been identified, isolated, and a fix has been distributed.' The sensor configuration update causing system crashes was corrected about an hour and a half later. By the 21st, the majority of the 8.5 million affected devices had been restored.
Impact of the Incident
1) Impact on cash flow and performance due to compensation, etc.
This incident affected aviation and banking systems, causing delays in over 0.02 million flights. There may be claims for economic losses against the company in the future.
2) Possibility of some companies hesitating to use the company's products for a while
For example, on July 20, Tesla's CEO Elon Musk posted on social media that 'We are in the process of removing CrowdStrike from all systems.' While not every company will follow suit, if more companies take similar measures, it could potentially impact short to medium-term performance.
3) Potential Impact on Brand Strength
This incident is not a cyber attack, but a problem that occurred during the company's software update, which could potentially have a negative impact on the brand image the company has built up.
◆ Investor Trends
Given the 11% decline and rapid increase in volume on July 19, investors seemed to be panicking to sell. On the other hand, some investors made bargain purchases. ETFs led by 'queen of US high-tech stocks' Cathie Wood purchased CrowdStrike shares on the 19th. As of the 19th, Arc Next Generation Internet ETF (ARKW) held 1.67% of CrowdStrike, while Arc Fintech ETF (ARKF) held 1.02%. Checking the buying and selling trends of institutional investors available on Bloomberg terminals, it was observed that there was no active trading on the 19th, with some funds making minor position adjustments.
Given the 11% decline and rapid increase in volume on July 19, investors seemed to be panicking to sell. On the other hand, some investors made bargain purchases. ETFs led by 'queen of US high-tech stocks' Cathie Wood purchased CrowdStrike shares on the 19th. As of the 19th, Arc Next Generation Internet ETF (ARKW) held 1.67% of CrowdStrike, while Arc Fintech ETF (ARKF) held 1.02%. Checking the buying and selling trends of institutional investors available on Bloomberg terminals, it was observed that there was no active trading on the 19th, with some funds making minor position adjustments.
◆ Analyst Evaluations
Following the incident, three analysts downgraded their investment rating on the company, while seven reduced their target stock price. However, the average percentage decrease in target stock price based on this was only 2.3%. Additionally, 15 analysts maintained their previous target stock price (all as of July 22).
Following the incident, three analysts downgraded their investment rating on the company, while seven reduced their target stock price. However, the average percentage decrease in target stock price based on this was only 2.3%. Additionally, 15 analysts maintained their previous target stock price (all as of July 22).
Overall, while the impact on performance due to the incident is to some extent anticipated, it is currently difficult to quantify. Institutional investors and analysts seem keen to assess the developments and see how they unfold. Strategies such as bargain buying, like those of Cathie Wood, may be effective in the medium to long term, but it might be wise to assess the impact on performance in the short term before taking investment actions. For now, attention is focused on whether the stock price will once again function as a lower support level, as it had in the fall of 2021, and then transition to a upper resistance level in early 2024 (refer to the graph below). In the options market, which reflects speculative movements, it seems that options betting on the company's stock recovering to $360 in a month are prevailing.
Microsoft's response and statement after the incident
On July 19, the company announced the following release in response to the incident: 'This is not a Microsoft incident, but considering the impact on the ecosystem, we are providing customers with the latest information on the procedures taken with CrowdStrike for restoration and support.' Subsequently, the company reported that the root cause of the IT issue had been resolved and revealed that less than 1% of devices were affected.
Impact of the Incident
Based on the above, the impact on Microsoft from this incident appears to be limited.
On July 19, Microsoft's stock price temporarily fell by 2%, then narrowed the decline and closed 0.7% lower. After the incident, four analysts announced that they would maintain their previous investment recommendation (buy) and target price. Other analysts (about 60) stated they would 'do nothing in particular', indicating that they do not anticipate adverse effects on Microsoft. Checking the trading trends of institutional investors, many funds increased their positions in Microsoft on the 19th. Institutional investors seem to be implementing buying on dips.
Company Overview
Provider of network security solutions. Their 'Prisma SASE' is the most comprehensive SASE solution in the industry, leading in AI-integrated SASE. SASE offers integrated security and networking services. A competitor to CrowdStrike in the endpoint security market.
Impact of the Incident
In this incident, Palo Alto is expected to benefit because customers may seek alternative security solutions. It may be advantageous for the company competing with CrowdStrike in the endpoint security market.
On July 19, the company's stock rose by 2%, reaching a new high. The 2% increase in stock price was influenced by one analyst downgrading investment recommendations and target stock price the day before the incident (unrelated to the incident). Only one analyst reacted after the incident, maintaining the previous investment recommendation (buy) and target stock price for Palo Alto. Checking the trading trends of institutional investors, it was found that several funds increased their holdings of the company's stock on July 19.
Market Analyst Amelia on July 22, 2024
Source: Company documents and Bloomberg, compiled by moomoo Securities
Source: Company documents and Bloomberg, compiled by moomoo Securities
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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183559261 : From the trading trends of institutional investors that can be confirmed with Bloomberg terminals, active trading was not seen on the 19th, and some funds adjusted their positions slightly. Yes, but can the same information be seen from Moomoo's trading trends?![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
ビットバレー投資家 OP : I'm indebted to you. Thank you for contacting us. <分析>If you click on the item on Moomoo's individual stock page, you can grasp trading trends of institutional investors from “Details >” in the “Institutional Investor Statistics” section. We look forward to working with you.
183559261 ビットバレー投資家 OP : Thank you so much for your kindness! I'll check![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
moomooサポート 183559261 : The trading trends of institutional investors in our app are not in real time, but the update date is displayed in the upper left corner of the screen. For example, Buffett Berkshire Hathaway's latest update date is 2024/07/24.