The Class Period begins on November 29, 2023, the day after CrowdStrike announced its financial results for the third quarter of fiscal year 2024.1 In connection with the release of these results, Defendants participated in a related earnings call with analysts and investors. On that call, Defendant Kurtz touted Falcon, claiming it “has made cybersecurity easy and effective for small businesses to the world’s largest enterprises” and that the “drumbeat of innovation was loud and clear with multiple releases and announcements showcasing CrowdStrike as the XDR leader, including the Falcon platform Raptor release.” Defendant Kurtz claimed that “from hygiene to patching, Falcon for IT lets customers consolidate multiple use cases and replace legacy products with our single-agent architecture,” and touted the Company’s “new Falcon Data Protection module that liberates customers from legacy [data loss prevention] products with modern, frictionless data security.”
Then, on July 19, 2024, a single software update pushed by CrowdStrike caused outages for millions of users of Microsoft Windows devices worldwide, including financial institutions, government entities, and corporations. In response, CrowdStrike disclosed that the outages had left users vulnerable to potential hacking threats. On this news, shares of CrowdStrike fell $38.09, or 11%, to close at $304.96 on July 19, 2024.
A few days later, on July 22, 2024, the fallout of the outages was further revealed as Congress called on CrowdStrike’s CEO to testify regarding CrowdStrike’s involvement in the outage crisis. Additionally, CrowdStrike’s stock rating was downgraded by several analysts including Guggenheim and BTIG. On this news, shares of CrowdStrike fell $41.05, or 13.5%, to close at $263.91 on July 22, 2024.
Finally, on July 29, 2024, news outlets reported that Delta Air Lines had hired prominent attorney, David Boies, to seek damages from CrowdStrike following the outages. On this news, shares of CrowdStrike fell $25.16, or 10%, to close at $233.65 on July 30, 2024.
The complaint alleges that, throughout the Class Period, Defendants made false and/or misleading statements and/or failed to disclose that: (1) CrowdStrike had instituted deficient controls in its procedures for updating its Falcon software platform, and was not properly testing updates to Falcon before rolling them out to customers; (2) this inadequate software testing created a substantial risk that an update to Falcon could cause major outages for a significant number of the company’s customers; and (3) such outages could pose, and in fact ultimately created, substantial reputational harm and legal risk to CrowdStrike. As a result of these materially false and misleading statements and omissions, CrowdStrike stock traded at artificially high prices during the Class Period.
What is a Lead Plaintiff?
A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Filling out the online form above or communicating with any counsel is not necessary to participate or share in any recovery achieved in this case. Any member of the purported class may move the court to serve as a lead plaintiff through counsel of his/her choice, or may choose to do nothing and remain an inactive class member. …...more
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