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Wednesday, February 5, 2025

CrowdStrike’s Delta Dispute: Is a Death Cross Looming for CRWD Stock?

All copyrighted images used with permission of the respective Owners.

CrowdStrike Holdings Inc. CRWD, the leading cybersecurity firm, is facing a perfect storm of challenges that threaten its recent stock surge. The company is battling a potential Death Cross, a bearish technical indicator, while navigating a contentious legal battle with Delta Air Lines Inc. DAL, which blames CrowdStrike for a major system outage.

Key Takeaways:

  • CrowdStrike’s stock has plummeted over 42% in two weeks, wiping out $40 billion from its market cap.
  • A buggy software update in July caused a global system meltdown, impacting millions of Microsoft Windows devices.
  • Delta Air Lines incurred a $500 million loss due to the outage and is demanding full compensation from CrowdStrike.
  • The company faces a potential Death Cross as its stock hovers below critical moving averages, signaling potential bearish trends.
  • Despite recent efforts to resolve the dispute with Delta, the legal battle and the technical challenges could push CrowdStrike’s stock further down.

The current crisis for CrowdStrike stems from a software update released in July that caused a global system meltdown. Millions of Microsoft Windows devices, including those critical for operations at hospitals and airports, crashed due to the bug. This resulted in widespread disruption and significant economic losses.

Delta Air Lines, a major customer of Microsoft and a user of CrowdStrike’s software, was particularly affected. The airline suffered a $500 million loss due to the outage, which disrupted its operations and led to flight delays and cancellations. Delta immediately launched a legal campaign against CrowdStrike, demanding full compensation for the damages suffered. The airline has hired a top-notch law firm to pursue this claim, while CrowdStrike insists its liability should be capped in the single-digit millions.

The Death Cross Looms Large

While CrowdStrike’s stock has enjoyed an impressive run in the past year, climbing 86.54% and experiencing significant gains year-to-date and in the past month, the recent events have cast a long shadow over its future. Investors are increasingly wary, and the technical indicators paint a bleak picture.

As the stock price hovers below critical moving averages, a Death Cross is looming. The 50-day SMA is at $301.72, and the 200-day SMA is at $299.90, both pointing to a bearish trend. Moreover, the MACD indicator is in the red at a negative 3.63, further suggesting downward momentum.

While there is slight buying pressure, with the eight-day and 20-day SMAs slightly below the current price, the overall trend remains bearish. The potential for a Death Cross is a significant concern for investors, as it has been historically associated with substantial price declines.

Can CrowdStrike Recover?

The legal battle with Delta and the technical headwinds are critical hurdles that CrowdStrike must overcome. CEO George Kurtz has recently expressed a desire to resolve the dispute with Delta, attempting to appease investors and restore confidence. However, the outcome of the legal battle and the technical outlook remain uncertain.

If CrowdStrike fails to resolve the legal dispute with Delta and address the technical deficiencies that led to the outage, it could face significant financial repercussions and further downward pressure on its stock price. On the other hand, a positive resolution with Delta and swift action to improve its software’s stability could help CrowdStrike regain investor confidence and potentially reverse the current bearish trend.

The next few months will be crucial for CrowdStrike’s future. Investors will be closely watching how the company responds to the legal battle, the technical challenges, and the potential Death Cross. The company’s ability to navigate these turbulent waters will determine whether it can regain its momentum or succumb to the bearish pressures.

Article Reference

Lisa Morgan
Lisa Morgan
Lisa Morgan covers the latest developments in technology, from groundbreaking innovations to industry trends.

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