Shares of credit reporting service Equifax are collapsing — down more than 13 percent — in the morning trading hours after the company reported a security breach yesterday that could involve 143 million customers.
That breach included sensitive data like Social Security numbers, dates of birth, addresses and potentially driver license numbers. All in all, this is a gold mine of information for potential fraud or identity theft. Equifax said that it discovered the leak on July 29th this year. In all, it's going to be an expensive process that may include a lot of things well beyond the initial impact crater and investigation, like offering credit monitoring services.
That's going to do a lot of things to a company like Equifax: erode confidence in the team, company and management; bake in all potential scenarios and risks that accompany a massive breach like this; and envision a future with fewer customers or more expensive efforts to win them back, to just name a few. It means that Wall Street, which has traditionally looked at a company like Equifax will have to reassess what it is going forward.
To be sure, this isn't one of the largest hacks in even the past few years. That honor goes to Yahoo, which in December last year disclosed that it discovered a breach of more than 1 billion accounts. But the Equifax hack contains a ton of personal information, the threat of which being out in the wild has led to a class action lawsuit filed against the company in Portland, Oregon.
In all, Equifax isn't a huge company — and while a drop like today's sheds more than $1 billion in market cap, it's still worth less than $15 billion. After opening, Equifax also wasn't even trading at the absolute low it hit after the news came out. But all this basically requires a recalibration of what the company is worth relative to its health going forward, and that's at least introduced a big question mark and a big plunge to go with it in the near term.