Risks of Buying the Dip in CrowdStrike Amid Global BSOD Incident
I've noticed many investors are eagerly buying the dip in CrowdStrike stock after its significant drop caused by the global BSOD issue linked to their endpoint sensor update. While this may seem like an attractive opportunity given CrowdStrike's strong growth history, there are serious risks to consider.
The recent update has caused widespread disruptions, impacting major enterprises globally. Although CrowdStrike's liability is capped at $100 per contract, this limitation might be challenged if gross negligence is proven. Courts could override these caps, leading to substantial legal and compensation costs.
Additionally, this incident has severely damaged CrowdStrike's reputation. Loss of customer trust can result in existing clients leaving and potential new clients being deterred, which will negatively impact long-term revenue. Moreover, regulatory bodies may investigate the incident due to its scale, adding further pressure and potential fines.
Investors should be cautious. The full extent of the financial and reputational damage may not yet be clear. The rush to buy the dip without fully understanding the potential fallout could lead to significant losses if more lawsuits emerge and the situation worsens. This incident's severity suggests that the risks could outweigh the potential short-term gains. It's crucial to thoroughly consider these factors before making investment decisions to avoid potentially catching a falling knife.
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104085035 : Fully agree, sell now and run
Money Thrill : I understand and but possible isn't that a bit of an exaggeration? The extended contracts will include the necessary safety measures . You write " liability is capped at $100 per contract", this limitation might be discussed but not so easy?
Umami66 : I work in cybersec sales, right now everyone is fire fighting, we can't meet SLA and will get LD'ed by commercials. This is not a security incident but an unprecedented disaster that cannot be salvaged by even the best IT teams... you literally have to recall everyones' devices to apply the breakfix, not even going to discuss out of town employees.Even now our response teams don't have a recovery plan as there is no internet connectivity to the affected devices.
nickelrust Umami66 : The only recovery is to switch it off for now while waiting for mitigation
Money Thrill : Sell on the bad news or buy? Each company can has problems, nobody excluded? And do people always have to hit a HAMMER these days, is there even a little bit of UNDERSTANDING for each other? Lawyers cost a lot of money and the results are not always as one would expect. I speak from experience ... I think I buy some![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
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MomentumPython1337 Money Thrill : you're talking about a stock that is already trading at a premium relative to other cybersecurity peers before this incident.
after this incident it definitely does not deserve such a high premium relative to peers.
the dip is justified and there will be more dips coming up. now is too early to buy even as a dip buyer.
MomentumPython1337 Money Thrill : not about the litigation cost. reputation is priceless. how is crowdstrike going to acquire new customers? that was the whole point of this premium valuation. ability to acquire new customers faster than peers and retain them, and to cross-sell crowdstrike's suite of products to these customers and that's how they planned to grow revenue so that revenue growth rate is accelerating or remains high YoY.
i just can't imagine how customer acquisition rate and revenue growth can remain at the same rate when reputation is down the drain.
Money Thrill : Yes, i think to wait a bit... Thanks
Alex Wong Cian Yih OP Money Thrill : I understand your concern, but the $100 liability cap per contract is indeed correct according to CrowdStrike's terms and conditions. While this limitation might be challenged, especially if gross negligence is proven, it remains a significant risk factor. The extended contracts might include safety measures, but the severity of this global disruption suggests these measures were not adequate. It's important for investors to fully consider the potential legal and financial ramifications before making hasty decisions based on the current dip.
Alex Wong Cian Yih OP Umami66 : I work in the Data Center field as a System Architect, so I'm particularly sensitive to incidents like this. I fully understand the severity of the situation. The responsibility and potential legal ramifications for such a widespread disruption are significant. This isn’t something that can be easily brushed off. The impact on global enterprises is profound, far beyond what outsiders or news reports might describe. The potential issues and liabilities stemming from this incident are not easy to address, and the damage to the company's reputation is considerable. I completely agree with your viewpoint.
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