It’s been a very challenging month for cybersecurity stocks, to say the least.
Despite projections that the cybersecurity market will grow to $562.72 billion by 2032, the industry is currently experiencing some turbulent times.
On July 19, 2024, CrowdStrike Holdings (NASDAQ:CRWD), one of the major cybersecurity players in the industry, rolled out a faulty update to its security software called Falcon Sensor.
Due to the fault, around 8.5 million Windows operating systems have been severely affected and completely dysfunctional for a fairly long time.
The outage disrupted millions of people and critical businesses, including airports, hospitals, and banks.
Despite not being the root cause of the outage, Microsoft’s (NASDAQ:MSFT) share price has dropped to $419 per share from $437 per share in just one week.
This outage has caused the top 500 U.S. companies more than $5.4 billion in damage.
Let alone the fact that there are many more threats to the cybersecurity industry, including ever-advancing malware technology, sophisticated cybercriminals, crypto-jacking, and malware. If combined with costly mistakes by cybersecurity companies, these issues can potentially bring the entire world to a halt.
With this in mind, let’s explore three cybersecurity stocks to sell before you regret it:
CrowdStrike Holdings (CRWD)
Unsurprisingly, CrowdStrike Holdings takes the number one spot on this list.
CrowdStrike is a prominent name in the cybersecurity industry, known for its security, threat intelligence, and cyberattack response services.
Based in Austin, Texas, CrowdStrike performed very well until the incident on July 19, 2024, as described above.
The company reached its peak price of $398.30 per share right before dropping by more than 40% without showing signs of recovery.
The tremendous stock price drop was primarily caused by a faulty update that rolled out across millions of Microsoft Windows systems and practically stopped numerous critical businesses.
Estimates say that Delta (NYSE:DAL) alone, a major American airline, faces $500m in costs from CrowdStrike’s outage. We can only imagine the total damage across all countries and businesses.
Even though CrowdStrike has shown impressive growth since its IPO, driven by the increasing demand for robust cybersecurity solutions, considering the latest events and anticipated legal battles CrowdStrike is likely to face, it could be wise for investors to steer away from this stock for the time being.
Okta (OKTA)
Okta (NASDAQ:OKTA) is an American-based IT company that helps companies and organizations manage and secure user authentication.
As of 2024, Okta employs over 5,900 people to help support its IT infrastructure.
In October 2023, Okta confirmed a security breach, and hackers stole all of its customer data despite initially claiming that only a fraction of customers were affected. Okta has about 18,000 customers.
Despite this breach not affecting Okta as much as CrowdStrike’s incident in terms of its share price, it could be wise for investors to consider selling Okta.
Okta’s stock price initially fell by more than 23%; it has since recovered and is showing an upward trend, yet it’s very far from recovering to its peak price in 2021.
SentinelOne (S)
SentinelOne (NYSE:S) is a newer cybersecurity entrant with AI-powered endpoint protection. It is one of CrowdStrike’s main competitors.
SentinelOne employs around 2,400 people.
Overall, it has been a fairly challenging year for SentinelOne. Its stock price declined by around 20% in the first half of 2024, but it is now showing signs of mild recovery.
SentinelOne currently sits at around $23 per share, far from its peak price of more than $76 per share in late 2021.
In its latest quarterly report, SentinelOne reported revenue of $186.36 million and a net loss of $70.11 million, resulting in a total loss of $338.69 million for 2024.
Despite SentinelOne not being directly affected by CrowdStrike’s incident, the remainder of this year could be challenging for the cybersecurity industry.
On the date of publication, Dmytro Spilka did not hold (either directly or indirectly) any positions in the securities mentioned in this article. 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.