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CrowdStrike faces lawsuit from shareholders over faulty update & loss of share value

CrowdStrike shareholders are seeking recompense after its bugged update caused failure of computer systems worldwide and tanked the company's value.

TJ Denzer

August 1, 2024 7:45 AM

Image via CrowdStrike

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Global cybersecurity firm CrowdStrike is having its feet held to the fire by shareholders in court. Over the weekend of July 18 to 21, a faulty update from CrowdStrike clashed with Microsoft Windows systems causing blue screen errors on systems worldwide. In the aftermath, CrowdStrike’s share values plummeted and the company’s overall valuation also dropped vastly. The class-action shareholder lawsuit claims the CrowdStrike made “false and misleading” statements regarding software testing, which resulted in the unfortunate situation.

CrowdStrike shareholders filed the lawsuit against the company this week, as reported by the BBC. The lawsuit, filed in Austin, Texas, fields allegations that CrowdStrike executives may have purposely defrauded investors with assertations of the quality of its software testing. For these allegations, the lawsuit seeks compensation for losses by shareholders that held CrowdStrike stock between November 29, 2023 and July 29, 2024. The amount being sought is unspecified at this time. The company has denied these allegations and has stated that it will face them in court.

“We believe this case lacks merit and we will vigorously defend the company,” a spokesperson said.

It was on July 19 that CrowdStrike pushed an update that clashed with Windows systems, causing blue screen errors to appear on more than 8.5 million computer systems worldwide. The issue was an ordeal for many PC users, but it was particularly detrimental in various industries, including banks, airlines, media firms, and even government services utilizing CrowdStrikes cybersecurity services. Thankfully, the company was able to roll back the update, mostly solving the main problem. However, by that point share prices began to plummet, falling from around $343.05 on July 18 to $263.91 a share on July 22. As of 7:30 a.m. PT on August 1, it was sitting around $226.50, more than $100 below its share price before the incident and wiping out billions in market value.

For all of those issues, it seems CrowdStrike will have to defend itself in court and looks like it has every intention of doing so. As we watch to see how the shareholder lawsuit shakes out, stay tuned for more updates on this story in our cybersecurity topic.

TJ Denzer

Senior News Editor

TJ Denzer is a player and writer with a passion for games that has dominated a lifetime. He found his way to the Shacknews roster in late 2019 and has worked his way to Senior News Editor since. Between news coverage, he also aides notably in livestream projects like the indie game-focused Indie-licious, the Shacknews Stimulus Games, and the Shacknews Dump. You can reach him at tj.denzer@shacknews.com and also find him on Twitter @JohnnyChugs.