Last Friday (July 19th), Microsoft experienced a rare large-scale "blue screen" incident, which affected multiple countries and regions around the world.

CrowdStrike shares plunge, multiple analysts cut ratings

Subsequently, Microsoft published an article stating that the incident was related to software updates from the cybersecurity company CrowdStrike. Microsoft estimates that CrowdStrike's updates have affected 8.5 million Windows devices, accounting for less than 1% of all Windows machines.

CrowdStrike CEO George Kurtz stated in a statement that this is not a security incident or cyber attack. And claimed that the problem has been discovered, isolated, and a fix has been deployed.After the incident, CrowdStrike was downgraded in rating or target price by multiple analysts.

On Monday, July 22nd, Guggenheim and BTIG downgraded CrowdStrike's stock rating from "buy" to "hold". Oppenheimer has removed CrowdStrike from its "2024 Hot Stocks" list.

In addition, Morgan Stanley, Well Fargo, RBC Capital, and several other securities firms have successively lowered their target stock prices for CrowdStrike.

Several analysts are concerned that this incident will affect CrowdStrike's financial condition and subsequent performance.

Raj Joshi, Senior Vice President of Moody's, stated that despite CrowdStrike's outstanding track record in innovation, market leadership, growth, and customer retention, this incident will damage the company's reputation. And it is believed that this interruption will also have a negative impact on operational performance, and affected customers may file huge liability claims.

BMO Capital Markets analyst Keith Bachman stated in a report, "We believe that this issue will have financial consequences. For example, we believe that clients will seek compensation and loss compensation, which may include discounts or credits for new contracts and renewals. Therefore, we believe that this may have an impact on growth rates and cash.

On July 23rd, the U.S. House Homeland Security Committee sent a letter to George Kurtz, CEO of CrowdStrike, requesting him to testify to Congress regarding last week's global technology disruption incident.

As the event continued to escalate, CrowdStrike's stock price plummeted, with a cumulative drop of over 20% in the past two trading days.

Cathie Wood took the opportunity to copy the bottom

Amidst the sharp decline of CrowdStrike, Cathie Wood once again made a bargain hunt.

Based on the closing price of $304.96 on that day, Cathie Wood's funds purchased approximately $12 million worth of CrowdStrike stocks.

Specifically, the ARK Next Generation Internet ETF purchased 27061 shares with an investment of approximately $8.25 million. The stock currently accounts for 2% of the fund. The fund has assets of $1.45 billion and has risen 29% in the past 12 months.

Another flagship fund, ARK Fintech Innovation ETF, spent $3.52 million to purchase 11534 shares. At present, this stock accounts for 1.3% of this ETF. The assets of this ETF are $893.5 million, an increase of 25% over the past year.

Cathie Wood's urgent bottom fishing indicates that she is betting on the stock's future rebound, and she is not the only one holding a similar view.

Morningstar analyst Malik Ahmed Khan said that the 11% drop in CrowdStrike on Friday was "too harsh," especially considering that this update does not mean that CrowdStrike's security devices have been compromised.

Khan stated in the report, "We believe that a pullback represents a great buying opportunity for long-term investors seeking high-quality securities/software investments.

Despite multiple analysts downgrading CrowdStrike's rating and target price, overall, Wall Street remains bullish on the company. According to statistics, the company currently has 41 "buy" ratings, 8 "hold" ratings, and 2 "sell" ratings. Analysts' average target price for CrowdStrike is approximately $390 per share, which is about 40% higher than the current stock price.