• Economy
  • Editor’s Pick
Money Rise Today – Investing and Stock News
  • Investing
  • Stock
Investing

CrowdStrike faces shareholder lawsuit over massive IT outage

by August 1, 2024
written by August 1, 2024

In a dramatic turn of events, shareholders of cybersecurity giant CrowdStrike have filed a class-action lawsuit against the company. 

The lawsuit alleges that CrowdStrike made “false and misleading” statements about its software testing processes, leading to a catastrophic IT outage that affected over eight million computers worldwide. 

This incident has not only raised questions about the company’s software integrity but also led to significant financial repercussions.

Did CrowdStrike executives mislead investors?

Filed in the federal court in Austin, Texas, the lawsuit claims that CrowdStrike executives misled investors by assuring them that the company’s software updates were thoroughly tested. 

Central to the complaint are statements made by CEO George Kurtz during a March 5 conference call, where he claimed the firm’s software was “validated, tested, and certified.”

Shareholders are seeking compensation for the substantial financial losses they incurred, pointing to a 32% drop in CrowdStrike’s share price following the incident. 

This drop equated to a staggering $25 billion loss in market value. 

The proposed class action aims to recover unspecified damages for investors who held shares between November 29 of the previous year and July 29.

CrowdStrike has denied the allegations and stated its intention to vigorously defend itself against the lawsuit. 

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

The outage resulted in $5.4 billion in losses

The faulty software update, which occurred on July 19, led to widespread disruptions across various sectors, including airlines, banks, and hospitals. 

According to cloud risk firm Parametrix, the outage resulted in $5.4 billion in direct losses.

The healthcare sector suffered the most, with a $1.9 billion loss, while the banking industry incurred a $1.4 billion loss. Companies in each industry are estimated to have averaged a loss of $43.6 million each. 

Delta Air Lines was among the hardest hit, with CEO Ed Bastian reporting a $500 million loss due to grounded flights and passenger compensation. 

Spirit Airlines also anticipated a $7.2 million hit to its third-quarter operating income due to the outage, which forced the carrier to cancel 470 flights.

CrowdStrike acknowledged the issue, attributing the crash to a “bug” in a system designed to ensure the proper functionality of software updates. 

The company has since stated that the affected computers were restored to normal as of 5 PM local time on July 29, ten days after the initial incident.

In response to the lawsuit, CrowdStrike emphasized its commitment to preventing future incidents by enhancing its software testing and implementing more rigorous checks. 

Additionally, Delta Air Lines is reportedly preparing its own legal action against CrowdStrike to seek compensation for the substantial losses it incurred. 

This potential lawsuit could further impact CrowdStrike’s reputation and financial stability.

Examples of shareholder activism

CrowdStrike’s legal troubles are part of a broader trend of shareholder activism following corporate mishaps. 

Boeing faced a shareholder lawsuit after the door-plug blowout incident in January, with allegations that the company prioritized profit over safety. 

Similarly, Tesla was sued by institutional investors for allegedly diverting its AI talent to Elon Musk’s new AI-focused company, xAI.

These examples underscore the growing accountability pressures on corporations from their investors, especially when financial losses and safety issues are at stake.

As CrowdStrike navigates this challenging period, the lawsuit and its implications could have far-reaching effects on the company’s operations and market standing. 

With the stakes high, both for the company and its shareholders, the outcome of this legal battle will be closely watched by industry analysts and investors alike.

The post CrowdStrike faces shareholder lawsuit over massive IT outage appeared first on Invezz

0 comment
0
FacebookTwitterPinterestEmail

previous post
Wayfair CEO Niraj Shah compares home goods slowdown to global financial crisis of 2008
next post
Does Roblox Q2 earnings signal a gaming industry rebound?

related articles

Asian markets open: Nikkei, Hang Seng fall on...

June 12, 2025

Aluminum and steel tariffs spark rise in secondary...

June 12, 2025

Airbus sees aviation boom ahead, global fleet to...

June 12, 2025

US-China trade talks and Washington’s decade-long effort to...

June 12, 2025

Europe markets open: Stoxx 600 dips as UK...

June 12, 2025

UK GDP falls by 0.3% in April as...

June 12, 2025

Gordon Brothers buys Poundland; pledges £80 mn for...

June 12, 2025

Air India plane crash: London-bound flight with 242...

June 12, 2025

Air India plane crash live update: Indian President...

June 12, 2025

Copper remains supported for now even as China...

June 12, 2025
Enter Your Information Below To Receive Free Trading Ideas, Latest News, And Articles.


Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!

Latest News

  • Vail stock struggles as strike leads to long lines at Park City Mountain

    January 6, 2025
  • Nvidia Shares Plummet Amid Tech Sector Selloff

    January 27, 2025
  • Johnson says Republicans ‘don’t have time’ to craft new Trump plan despite Musk’s call to ‘KILL the BILL’

    June 4, 2025
  • SCOOP: Lindsey Graham amendment signals GOP budget breakthrough, sets stage for Trump agenda

    April 2, 2025
  • Here’s what happened during President Donald Trump’s 5th week in office

    February 22, 2025

Popular Posts

  • 1

    Secret Service admits leaning on ‘state and local partners’ after claim it ignored Trump team’s past requests

    July 21, 2024
  • 2

    Five more House Democrats call on Biden to drop out, third US senator

    July 19, 2024
  • 3

    Elon and Vivek should tackle US funding for this boondoogle organization and score a multimillion dollar win

    December 4, 2024
  • 4

    Forex Profit Calculator: Maximize Your Trading Potential

    July 10, 2024
  • 5

    Biden calls to ‘lower the temperature’ then bashes Trump in NAACP speech

    July 17, 2024

Categories

  • Economy (829)
  • Editor's Pick (6,045)
  • Investing (634)
  • Stock (925)

Latest Posts

  • Maxine Waters campaign to pay $68K for violating campaign finance laws

    June 2, 2025
  • Deadly drone wars are already here and the US is horribly unprepared

    June 7, 2025
  • Harris’ mixed record on Israel enters spotlight during Netanyahu visit

    July 24, 2024

Recent Posts

  • Trump’s House GOP allies demand swift confirmation of Cabinet picks amid delays

    January 16, 2025
  • Former FBI Director Robert Mueller has Parkinson’s disease: report

    September 1, 2025
  • Trump indicted a second time in election subversion case brought by special counsel Jack Smith

    August 27, 2024

Editor’s Pick

  • Iran attacks US base in Qatar, Trump thanks Tehran for advance notice and ‘very weak response’

    June 23, 2025
  • Russian border states eye exit of landmine treaty to fortify defenses and deter Putin

    March 13, 2025
  • Dems warn House Republicans will pay price at ballot box for passing Trump’s ‘big beautiful bill’

    May 21, 2025
  • About us
  • Contacts
  • Privacy Policy
  • Terms & Conditions

Disclaimer: moneyrisetoday.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2025 moneyrisetoday.com | All Rights Reserved

Money Rise Today – Investing and Stock News
  • Economy
  • Editor’s Pick
Money Rise Today – Investing and Stock News
  • Investing
  • Stock