To The Moon

On July 19th, Microsoft's "blue screen" incident was on the front page of social media worldwide early. A large number of enterprise users of Windows were affected, thus affecting airlines, railroads, media, studios, exchanges, schools, banks, technology and other industries.

Inexplicably, various "retro" products appeared, such as handwritten boarding passes.

Upstates

According to Microsoft's official sources, the outage started at the Azure regional data center in the central United States, and the source is still the cybersecurity firm Crowdstrike, which says that the blue screen of death outage for Windows 10 is caused by its new sensor update.However, no official statement has been seen released yet.

Who benefits?

While the pre-market numbers show that $CrowdStrike Holdings, Inc.(CRWD)$ is down a whopping 12%, with the market worried about its market share loss, and $Microsoft(MSFT)$ is down 2%, after all, it didn't test for the bug, but in terms of decliningBut in terms of absolute market capitalization, it's still MSFT by a bit more.

Related competitor shares have risen.

For example, the company most directly focused on endpoint security and XDR (Extended Detection and Response), $SentinelOne, Inc(S)$, is up more than 12%; there's also $Google's (GOOG)$ Cybereason, $Broadcom (AVGO)$ 's $VMware (VMW)$ Carbon Black, but the impact of the big companies' gains and losses was relatively small.

As for cybersecurity peers, such as $Cyber-Ark Software(CYBR)$ $ $Okta Inc.(OKTA)$ $Palo Alto Networks(PANW)$ also made a modest recovery, but were mostly flat as there was no evidence of a cyber attack.

Investment Highlights

1. In terms of technical capability, $CrowdStrike Holdings, Inc.(CRWD)$ remains at the top of the industry, with a relatively long history of cooperation with large companies and a large market share.It is not likely to settle in a day or two for large customers to make deployments, and while some customers may reconsider their security strategies, they may still consider renewing their contracts after weighing the overall level of technology, so it is unlikely to affect subsequent orders;

2. But it may affect CrowdStike's reputation to a certain extent. This kind of accident appeared once is okay, if more is doomed.

3. The market is still more worried about the current overvaluation of CRWD, as well as the potential downside of the growth rate.This wave of gains benefiting from AI has lifted the company's valuation very high, currently the highest in the industry according to gross margin multiples, and the 33% growth rate of Q1 may not be able to maintain. The decline in ARR is not necessarily affected by this event, and may be more affected by the macro-economic impact.

   

4. It just so happens that the recent market crash, style rotation, also gave some investors reason to retreat.

5. Of course, in the long run, CrowdStrike's industry position isn't likely to suffer too much as long as accidents like this don't happen too often, so today's panicked outflows due to the accident itself may also come back to haunt it at a later date.