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Price vs. Cost: What the Stock Market Teaches Us about Data Breaches

Normally, when you hear about stocks dropping, it’s due to some scandal or crisis. Market watchers will tell you that a range of elements can affect the value of a publicly traded company and cause stock prices to rise or fall. Consumer confidence is a major factor that influences a company’s reputation and perceived value.

What does that have to do with data breaches? A lot more than you might think.

What Does it Look Like? Anatomy of a Data Leak

Startups and SMBs undergoing a digital transformation aren’t the only ones having issues. Yahoo and Amazon have experienced record-breaking breaches that cost the companies millions of dollars and damaged their reputations. One of the hardest hit industries is health care, where millions of patient health records are infiltrated each day.

Would you trust a company that couldn’t keep your most sensitive information secure?

Neither would I, and it seems investors might have a problem with it too.

Share Price: How Low Can You Go?

We know that a small business can be devastated after a data breach even if it never becomes public knowledge, but what about the effects on larger publicly-traded enterprises, specifically when it comes to the underlying valuation of share price?

The UK-based research firm, Comparitech, performed an analysis of 24 companies. Each is publicly traded on the NYSE, and each experienced a data loss or exposure of at least one million public records. The companies analyzed included Apple, Equifax, Experian, Sony, Under Armor, Vodafone, T-Mobile, JP Morgan Chase, Dun & Bradstreet and other giants in their particular industries.

This report was released in August 2018 and extended backwards over a three-year period. Comparitech used the NASDAQ index as a benchmark for comparison against the individual NYSE companies.

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