July 31, 2024 at 10:51AM
CrowdStrike is facing lawsuits from investors and customers after a bad software update caused global outages. The incident cost US companies an estimated $15 billion, with airlines suffering the most significant losses. While lawsuits are being pursued, some believe the company may be shielded from direct financial impacts due to software licenses and insurance coverage.
From the provided meeting notes, key takeaways include:
– CrowdStrike, listed on NASDAQ as CRWD, is facing lawsuits from investors and customers after a worldwide outage caused by a bad update affecting around 8.5 million Windows devices on July 19.
– The incident led to significant problems for various sectors, including aviation, finance, healthcare, and education, and it took roughly one week for most devices to be restored.
– Insurer Parametrix estimates the direct financial loss for US Fortune 500 companies, excluding Microsoft, at $5.4 billion, with the total loss estimated at $15 billion. Only 10-20% of the losses suffered by Fortune 500 customers are expected to be covered by insurance.
– Airlines, particularly Delta, were significantly affected, with Delta estimated to have lost between $350 million and $500 million due to the outages. The airline has hired prominent attorney David Boies to pursue potential damages from both CrowdStrike and Microsoft.
– CrowdStrike is also facing a class action by investors, alleging that the company made “materially false and misleading statements and omissions” about its product updates, causing the stock to trade at artificially high prices.
– Despite the substantial impacts, it is noted that CrowdStrike may be shielded from direct financial impacts due to software licenses limiting liability and the insurance held by the security firm and its customers.
– CrowdStrike shares have fallen approximately 25% since the disruption, resulting in over $20 billion being shaved off the company’s market valuation.
This summary highlights the major points from the meeting notes, focusing on the legal and financial implications for CrowdStrike following the global outages caused by the bad update.