Investors are suing CrowdStrike after the company’s software update caused nationwide technology outages two weeks ago.
The suit accuses CrowdStrike of lying to investors by claiming its technology had been “validated, tested, and certified.”
CrowdStrike’s stock price predictably tanked after the July 19 outage disrupted various services across the nation, from flights to court dates to hospital appointments.
The company eventually blamed the outage on a bug in its latest update, which it pushed to millions of customers. Approximately 8.5 million computers crashed due to the bad data from CrowdStrike.
Back in March, CrowdStrike CEO and founder George Kurtz assured investors in a conference call that the company’s software had been rigorously tested, according to the lawsuit. The plaintiffs accuse CrowdStrike and Kurtz of lying to mislead investors and pump up the stock price.
The suit claims that CrowdStrike’s stock price was artificially high based on this information beginning in November 2023. Formally filed by the Plymouth County Retirement Association of Plymouth, Mass., the suit seeks class-action status for anyone who owned CrowdStrike stock.
“We believe this case lacks merit and we will vigorously defend the company,” a CrowdStrike spokesperson told the BBC.
CrowdStrike was almost immediately threatened with lawsuits after the outage, which wrecked travel plans for millions of Americans. Delta CEO Ed Bastian said Wednesday that the disaster likely cost the airline $500 million and therefore it would likely seek damages.
“You can’t come into a mission critical 24/7 operation and tell us we have a bug,” he said in an interview. “We have to protect our customers, our employees, for the damage, not just to the cost of it, but to the brand, the reputational damage.”
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