CrowdStrike Fires Back at Delta: What to Know

The back and forth between CrowdStrike Holdings (CRWD) and Delta Air Lines (DAL) is heating up after the cybersecurity firm said the air carrier rejected its offer of onsite help during a recent technical outage that impacted several industries and services. CrowdStrike also said that is ready to defend itself against Delta's claims.

Delta canceled over 5,000 flights between July 19 and July 25, costing it about $500 million, which it said it would try to recover by pursuing legal claims against CrowdStrike and Microsoft (MSFT), according to CNBC. 

However, Michael Carlinsky, a lawyer for the cybersecurity firm and co-managing partner at Quinn Emanuel Urquhart & Sullivan, said in a letter sent Sunday night that CrowdStrike CEO George Kurtz reached out to Delta CEO Ed Bastian "to offer onsite assistance, but received no response."

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"Should Delta pursue this path, Delta will have to explain to the public, its shareholders, and ultimately a jury why CrowdStrike took responsibility for its actions – swiftly, transparently, and constructively – while Delta did not," Carlinsky wrote in the letter.

The lawyer added that CrowdStrike's liability is capped in the single-digit millions and that CrowdStrike hopes "Delta will agree to work cooperatively to find a resolution."

CrowdStrike's stock has fallen over 35% since July 18, the day before the outage, while Delta's stock is down about 14%.

Is CrowdStrike stock a buy, sell or hold?

Despite the bad press and poor price performance since the technical outage, Wall Street remains bullish on the cybersecurity stock. 

According to S&P Global Market Intelligence, the average analyst target price for CRWD stock is $356.23, representing implied upside of over 61% to current levels. Additionally, the consensus recommendation is a Buy.

Financial services firm Wedbush has a Buy rating on CRWD stock with a $315 price target.

"The mention of CrowdStrike's legal liability in 'single-digit' millions will help frame what the potential liability and damages risk for CRWD could be," says Wedbush analyst Taz Koujalgi. "For a large customer such as Delta, if CRWD's liability risk is in the single-digit millions, the overall risk would be a lot less than feared."

Koujalgi added that CRWD's overall liability for the outage would be in the $200 million range, which is lower than many anticipated.

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