Data Breaches Have Long-Term Impact on Stock Prices

Trailrunner7 writes: Stock prices typically drop after a breach is disclosed, but they tend to bounce back within a few weeks, suggesting that investors don’t punish companies for security mistakes. Analysis by UK-based Comparitech found that breaches can impact—but it's muted—the company's stock performance.

Even though the stock price went back up after the initial breach disclosure, the prices weren’t as high as they would have been if the breach hadn’t happened. Three years after the data breach was disclosed, the stock price for the companies on average had risen 28.71 percent, but was down 15.58 percent compared to the NASDAQ index, which Comparitech used as a proxy for the wider market.

“In the longer term, share prices continue to grow, but not fast enough to keep up with the NASDAQ,” said Comparitech analyst Paul Bischoff.

The analysis focused on the closing share prices on the New York Stock Exchange for 24 companies that reported a data breach with at least a million records lost, including TJ Maxx, Apple, Yahoo, and LinkedIn.