Another week, another hacking scandal. At least, that’s what it’s starting to feel like, as more and more major companies fall victim to hackers.
This not only raises real questions about online security but also it makes us wonder about the effects on the hacked companies themselves. What happens to them — and their stock prices — when word of a security breach hits front page news?
Here are five of the biggest hacking scandals in recent years and accompanying financials to chew on:
Early this month, Apple came under scrutiny for a vulnerability in its iCloud service that resulted in the theft of private photos of several famous actresses. The problem appeared to be an issue with the Find My iPhone feature, which gave hackers from anonymous message board 4chan easy access to celebrity passwords … and thus a sampling of NSFW photos.
On the surface, it might seem an industry giant like Apple is impervious to such scandals, but that doesn’t appear to be the case. Apple’s stock price took quite a hit initially, dropping from $103 to $99 on September 3; it dropped another dollar by the close of that Thursday. What’s more, it was terrible timing for Apple, as it happened shortly before its September 9 iPhone 6 and Apple Watch announcement.
This might explain Tim Cook’s sudden willingness to speak with the Wall Street Journal to address concerns and reassure the public that the company is doing all it can to prevent leaks like this in the future. Late last week Apple’s stock price was on a slight uptick. Following the iPhone 6 announcement, it increased again and now sits at nearly $102.
In late 2013, right around Thanksgiving, Target was hacked in a major way. A hacker installed malware on Target’s security and payments processing system that worked in a very straightforward way: Whenever someone swiped her card to make a purchase, the malware would wake up and capture the credit card number, putting people who did their Black Friday shopping at Target at risk.
Target first acknowledged the hack December 19, and its stock prices obviously suffered in the months to come. And the end of November, the retail chain was sitting at $64. By February 5, it had dropped all the way down to $55. It only just recently started to gain ground back into the $60+ territory.
Home Depot was hacked months ago, but we only just found out about it at the beginning of September. It now appears the hackers used the exact same malware as in the Target breach, because apparently these giant companies aren’t learning from other people’s mistakes. Reports now indicate the hack may have affected every single location in the U.S, which sort of makes me never want to shop anywhere again.
In any case, Home Depot saw a slight dip in its stock prices, which sat at $93 prior to the announcement of the breach and dropped to $89 by the following day.
The News Corp hacking scandal made headlines for months. But in this case, unlike the others here, it was employees of News Corp. who were doing the hacking: Reporters used a variety of techniques to get in to voicemails and other personal data. While it was initially thought just celebrities and politicians were the targets of hacking conducted by News of the World employees, it turned out that victims of the 2005 London bombings and the relatives of deceased soldiers were also targeted. Many people took the company to court, too, and when all of the civil cases and the costs of the hacking itself are tallied up, it was estimated News Corp lost $1.62 billion.
Even though the public was generally appalled with News Corp at the time, the company only saw a slight dip in its stock price in mid-2011, when it dropped from $17 to $14 but quickly recovered.
Google (Operation Aurora)
The last hacking scandal we’ll look at happened back in 2009, when Google was the target of an advanced attack that originated in China. Dubbed Operation Aurora, the hacking resulted in Google’s intellectual property being stolen. Google first reported the hack in January 2010.
Around the time the hack was revealed to the public, Google sat at $300, but it quickly dropped. By the end of February, it had dropped to $263, and by July it dipped all the way down to $218 — the stock’s lowest price in the past five years.
While not every company on this list saw a significant drop in stock price following a hacking scandal, all saw at least a minor downward trend. With the big dogs getting hurt by hacking, it’s even more imperative for companies to bolster security, less they wish to incur losses. Rebounding isn’t always possible — because not every company is a Google.
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