Stock Market

DAL Stock Alert: Delta Braces for $500 Million Hit From CrowdStrike Outage

Delta hasn’t filed a lawsuit against CrowdStrike yet but it might only be a matter of time

Source: EQRoy / Shutterstock.com

CrowdStrike (NASDAQ:CRWD) has lost about 40% of its value during the past month as uncertainty plagues the stock following an outage that it was responsible for.

The outage wasn’t a result of a product vulnerability, hack or breach, but rather because of a faulty sensor configuration update. It resulted in a “blue screen of death” on 8.5 million devices running Microsoft (NASDAQ:MSFT) Windows, including airlines and healthcare businesses.

According to insurer Parametrix, the aftermath will result in an estimated $5.4 billion worth of damages for Fortune 500 companies, excluding Microsoft. Global damages are estimated to be $15 billion.

Delta Airlines (NYSE:DAL) was one of the most affected companies and took longer to recover from the outage than other airlines. Delta had to cancel nearly 7,000 flights and is in the process of dealing with over 176,000 refund or reimbursement requests.

DAL stock spiked earlier in the afternoon but now looks to be set to close the day flat.

DAL Stock: Delta Says CrowdStrike Outage Resulted in $500 Million of Damages

Delta CEO Ed Bastian told CNBC this morning that the airline had sustained $500 million in damages from the outage. He also said that Delta had to manually reset over 40,000 servers.

“If you’re going to be having access, priority access to the Delta ecosystem in terms of technology, you’ve got to test the stuff,” said Bastian. “You can’t come into a mission critical 24/7 operation and tell us we have a bug.”

Additionally, Bastian said that CrowdStrike has not offered to help Delta financially, instead offering free consulting services.

Earlier this week, Delta hired attorney David Boies in an attempt to seek damages from CrowdStrike and Microsoft. Delta has not yet filed a lawsuit against either company.

Lawsuits are a long and drawn-out process, and the potential for this litigation creates extreme uncertainty in CRWD stock.

Still, CrowdStrike’s purchase order terms could offer the company some protection:

“IN NO EVENT SHALL CROWDSTRIKE’S AGGREGATE LIABILITY ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT EXCEED THE AMOUNTS PAID OR PAYABLE BY CROWDSTRIKE TO SUPPLIER UNDER THIS AGREEMENT IN THE TWELVE MONTHS PRECEDING ANY CLAIM REGARDLESS OF THE CAUSE OR FORM OF ACTION.”

On the date of publication, Eddie Pan held a LONG position in CRWD and MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.

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