On Friday, July 20, a global IT system failure caused market turmoil, with CrowdStrike, the network security company to blame, plummeting more than 11%. At the same time, well-known investor Cathy Wood, who manages the ARK ETF, reversed her position on CrowdStrike and bought in. Product structure, with operating income of CNY401/CNY1,288/CNY60 billion for products valued between CNY100-300 billion respectively.
One update causes the biggest system crash in history
CrowdStrike is a leading American cybersecurity company, with 271 out of the Fortune 500 companies using its services, including Microsoft, Amazon, AWS, etc. In addition, many government agencies (such as the top U.S. cybersecurity and infrastructure security agency) also rely on its software.
On Friday, a bug in the upgraded security software caused a large-scale crash of the Microsoft Windows system. This event not only rendered the computers of many companies' employees unable to start up, resulting in 'blue screen crashes', but also had a severe impact on airports, medical services, supply chains, banks, and securities exchanges in many countries around the world. It is expected to take several weeks for full recovery.
Foreign media described this event as 'the biggest IT crash in history' and compared it to the year-2000 bug, considering it even more serious in terms of impact.
It is reported that the erroneous code in the Falcon security software update by CrowdStrike was one of the core factors that caused this disaster.
Falcon is an antivirus platform that can deeply access endpoint systems such as laptops, servers, and routers to detect malicious software and potential threats. However, due to CrowdStrike's ongoing addition of new detection features to the system in response to emerging threats, Falcon needs to be automatically updated regularly. However, this arrangement, while intended to enhance security and stability, may sometimes have the opposite effect.
Mikko Hypponen, chief research officer at network security company WithSecure, said: 'The scale of this crash is unprecedented, with such a large-scale interruption of workstations around the world being rare.' He recalled that ten years ago, massive interruptions caused by network worms and trojans were more common; however, global service interruptions now more commonly occur on the server side of systems, usually attributed to problems with cloud service providers such as Amazon AWS, internet link interruptions, authentication failures, or DNS service anomalies.
CrowdStrike CEO George Kurtz admitted on Friday that the crisis originated from a 'defect' in the software code released for the Windows platform by the company, and that Mac and Linux systems were not affected. In an official statement, he said: 'The problem has been quickly identified, isolated and remedied.' He added that the series of problems were not caused by a network hack. Facing the media, Kurtz apologized sincerely and admitted that it may take some time to fully restore the system.
More Action by Cathy Wood: Sells Tesla Stock to Buy CrowdStrike
Under these circumstances, on Friday local time, Ark Investment under the leadership of Cathy Wood purchased about 385,950 shares of CrowdStrike stock valued at approximately USD13.24 million through the ARKW and ARKF ETFs.
In addition to increasing its holdings in CrowdStrike, ARK also increased its holdings in software development platform GitLab Inc., purchasing 38,519 shares through the ARKW ETF, valued at just over $2 million.
In terms of reducing holdings, ARK sold shares in several companies, including continuing to sell Coinbase stock and selling 17,607 shares of Tesla stock worth nearly 4.39 million U.S. dollars after selling on Thursday.
It is worth noting that this global IT technical failure has also caused some of Tesla's production lines to temporarily shut down, with employees not being told when they can resume work.
However, Tesla CEO Elon Musk's attitude is completely different from that of Cathy Wood.
He said: 'CrowdStrike has been removed from all systems, and CrowdStrike has not released a new version.' He also warned that the IT outage had caused 'auto supply chain paralysis'.
(Screenshot from X)
Analysts have differing views, with Wedbush Securities analyst Dan Ives stating: 'This is clearly a major blow to CrowdStrike, whose shares will come under pressure... This event was caused by a technical update, not hackers or cybersecurity threats, which are more worrisome.'
While some analysts believe that Friday's event has damaged CrowdStrike, they expect that competitors will not take too much market share as a result.
JPMorgan analyst said, "Initially, customers may feel uneasy, but the company has handled this issue well... The failure did occur and it was serious, but we believe CrowdStrike's hard work and effective response will be helpful."
Ben Bernstein, current operator of Gusto, a former cybersecurity investor and security startup, said he plans to continue using CrowdStrike for now. In addition, Ark Invest made small adjustments to its holdings in some companies, including selling UiPath Inc. and acquiring Oklo Inc. In the past week, the latter has been a buy for ARK, reflecting a potential trend in the company's investment strategy.