Retail Investors Forgive Microsoft But Hammer CrowdStrike After Global IT Outage

Adding fuel to the fire of the recent Big Tech slump, a major global IT outage on Friday rattled markets. The cause? A malfunctioning update from CrowdStrike's threat-monitoring software, impacting Microsoft Windows users globally. Although this led to the broader stock market losing love for these two companies, retail investors have taken a mixed stance.

Despite the widespread disruption affecting businesses, airlines, banks, and media, Microsoft (MSFT) seems to be catching a break from retail investors. Stocktwits sentiment quickly shifted from bearish to bullish (55/100) after Microsoft effectively placed the blame on CrowdStrike.

Retail commentary reflected a forgiving mood, with some users using sarcasm to highlight the incident's seemingly one-off nature. “My Goodyear tires popped on my Ferrari, damn bro, Ferrari sucks man, worst car EVER,” wrote a user with the handle ‘Frescaboy’.

Some saw this as a buying opportunity given the stock's recent dip. Microsoft shares were down 1.40% premarket, potentially eyeing another day in the red. However, analyst upgrades and upcoming Q2 earnings could offer some support.

CrowdStrike (CRWD), on the other hand, is facing absolute heat from investors. The stock plummeted over 11% premarket after news of the outage, and Stocktwits sentiment mirrored the negativity (44/100) with a flurry of messages. 

While some saw it as an overreaction, others expressed concern about potential lawsuits and long-term damage.

CrowdStrike CEO, George Kurtz, took to social media to clarify it wasn't a security breach but a software defect, and a fix was being deployed. However, the explanation failed to appease investors. 

Rubbing salt on the wounds was Redburn Atlantic separately downgrading the stock to "Sell" and slashing its price target to $275 from $380, citing “demanding valuation” and potential for a sell-off if sales disappoint.

This incident could be a turning point for both companies. CrowdStrike, the year-to-date outperformer (39% vs. 18% for Microsoft), now faces the challenge of regaining investor confidence. For Microsoft, the outage might be a temporary blip, but it could potentially impact future partnerships with security firms.

The retail market reaction is clear: Microsoft seems to be getting a temporary reprieve, while CrowdStrike is left to grapple with the consequences of this critical error. Whether CrowdStrike can recover or if this marks a shift in the cybersecurity landscape remains to be seen.

Image by efes from Pixabay