A recent software update by CrowdStrike resulted in widespread disruptions across various sectors globally, including airlines, banks, hospitals, and emergency services. This led to a significant global outage affecting over eight million computers.
Shareholders have filed a lawsuit against CrowdStrike, alleging that the company provided misleading information about the reliability of its software. The flawed software update caused major disruptions, resulting in a 32% drop in CrowdStrike’s share price and erasing $25 billion in market value.
The fallout from the outage included CEO George Kurtz being summoned to testify before Congress and Delta Air Lines seeking damages. The lawsuit, led by the Plymouth County Retirement Association, seeks unspecified damages for shareholders who held CrowdStrike Class A shares between November 29, 2023, and July 29, 2024.
CrowdStrike has responded by stating that they believe the case lacks merit and will vigorously defend the company. The financial impact of the outage has been significant, with Delta Air Lines estimating a loss of $500 million in revenue and compensation for affected passengers.
A report by cyber insurer Parametrix revealed that the average loss per affected company was around $43.6 million, with the healthcare sector being the hardest hit. Airlines also suffered significant losses, with the total insured losses among Fortune 500 companies ranging between $540 million and $1.08 billion.
Following the drop in share price, CrowdStrike shares have decreased from $343.05 to $231.96. Shareholders often file lawsuits against companies after negative events that impact stock prices. This lawsuit may be the first of many that CrowdStrike will face as the full extent of the outage’s impact is realized.
The case is titled Plymouth County Retirement Association v. CrowdStrike Inc et al, U.S. District Court, Western District of Texas, No. 24-00857.