Microsoft's "Blue Screen" incident continues to ferment, with CrowdStrike becoming a "discarded child" on Wall Street

According to the financial news app Zhitong Finance, the cybersecurity company CrowdStrike (CRWD.US) fell more than 5% in pre-market trading on Monday, continuing the decline caused by last week's outage. Research firms Guggenheim and BTIG have downgraded the stock rating and advised investors to "let the dust settle".

Guggenheim downgraded CrowdStrike's rating from "buy" to "neutral". Analyst John Difucci stated, "Due to significant quality assurance issues leading to widespread IT system disruptions globally, new deals are expected to face resistance in the short term. Additionally, we have always believed that there are risks to the consensus forecast for the fourth quarter, especially in terms of annual recurring revenue." "Therefore, among the software stocks we cover, CrowdStrike still has the highest multiple based on recurring revenue (enterprise value/recurring revenue reaching 18.5 times), and we are temporarily staying away from this stock."

DiFucci mentioned that the outage affected Microsoft (MSFT.US) Windows computers globally and disrupted the global economy, which could have a negative impact on CrowdStrike's business, even if only temporarily.

"The company's response to this incident is impressive, but it still caused significant disruptions to businesses (and people) worldwide," DiFucci continued. "Rebuilding its reputation may take more time, and it may affect new business signings at least in the short term."

Despite the downgrade, DiFucci still offered some hope to investors, stating that "they can get through it if they have a long-term perspective."

"However, we find it difficult to tell investors that they need to buy CrowdStrike now," added DiFucci.

BTIG also downgraded CrowdStrike's rating from "buy" to "neutral" after the outage. BTIG analyst Gray Powell stated, "The negative feedback exceeded expectations."

The outage also had a negative impact on Microsoft.

Citi Group stated that the widespread network disruption caused by CrowdStrike's faulty update last week had a significant global impact and raised questions about the "perception gap" in Microsoft's Windows operating system.

Citi analyst Tyler Radke said, "Overall, we believe the financial impact of this event on Microsoft is limited (especially compared to CrowdStrike), but we also note that Microsoft may still need to address the negative perceptions surrounding its operating system vulnerability. A public hearing will be held in the coming days, and the U.S. Federal Trade Commission will conduct further investigations." Citi has a "buy" rating on Microsoft with a target price of $520.

The outage caused many computers worldwide to experience the dreaded "blue screen of death" due to CrowdStrike's "low-level kernel access" to Windows. However, this outage did not affect Mac computers or computers running Linux operating systems, as each operating system has different kernel access policies Radke said that although these differences are well known in the IT industry, this downtime may raise concerns about Windows.

Radke concluded: "We believe that this event will not cause substantial damage to the market share of the Windows operating system, but it may trigger more concerns about vulnerabilities."

As of the time of publication, CrowdStrike fell 5.2% in pre-market trading to $289.10, down 11.10% from the previous trading day; Microsoft rose 0.75% in pre-market trading to $440.40, down 0.74% from the previous trading day