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Data breaches cause 7 per cent share price falls in affected companies

By Marianne Curphey
November 8, 2019, 1:08 PM GMT

    Study tracking the effects of data breaches on companies shows prices hit lowest point 14 days after leak

    An analysis of the biggest data breaches in history has found that the share price of the companies affected was hit by an average 7 per cent fall as a result.

    The survey, which looked at the closing share prices of 28 companies, all listed on the New York Stock Exchange, found that the share price hit a low point 14 market days after a breach.

    The analysis looked at companies that had suffered at least one million records leaked, with some surpassing 100 million. As some companies were breached more than once, the total number of breaches examined was 33.

    The report by Comparitech found share prices fell 7.27 per cent on average, and underperformed the NASDAQ by -4.18 per cent.

    In the long term, breached companies underperformed the market. After one year, the share price grew 8.38 per cent on average, but underperformed the NASDAQ by -6.49 per cent.

    After two years, the average share price rose 12.78 per cent, but underperformed the NASDAQ by -12.88 per cent. And after three years, the average share price is up 32.53 per cent but down against the NASDAQ by -13.27 per cent.

    Comparitech, which analyses security, privacy and networking services, noted that the impact of data breaches is likely to diminish over time.

    Finance and payment companies saw the largest drop in share price performance following a breach. Healthcare companies were least affected.

    Breaches of highly sensitive information like credit card and social security numbers see larger drops in share price performance on average than companies that leak less sensitive data.

    Companies analysed included Apple, Adobe, Anthem, Community Health Systems, Capital One, Dun & Bradstreet, Facebook, First American Financial, Ebay, Equifax, Global Payments, Home Depot, Health Net, Heartland Payment Systems, JP Morgan Chase, LinkedIn, Marriott International, Monster, T-Mobile, Sony, Staples, Target, TJ Maxx, Under Armour, Vodafone, and Yahoo.

    Further reading:

    The biggest data breaches - and the costs

    Google to pay up to $200 in FTC fine

    Tokenised securities are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how tokenised securities and leverage work and whether you can afford to take the high risk of losing your money. Nothing in the above article should be regarded as a recommendation to trade generally, to trade on a particular platform or to trade in a particular asset. Asset prices can go down as well as up and past performance is not a guide to future performance. Investors and traders should thoroughly research an asset or strategy before making any trading or investment decision and if necessary seek professional advice.

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