It's never good news when a company is hit by a big-time data breach. Just ask Target (TGT) , CVS (CVS) , Home Depot (HD) , and JP Morgan Chase (JPM) - all of whom suffered a massive data breach in recent years, which resulted in millions of customer data records being compromised, including credit card numbers, Social Security numbers, and other valuable data.
When data breaches occur, companies can expect a hit to their financial bottom line. But that's especially so over the long-term, as the pain continues with a significant loss in the firm's publicly-traded stock price.
Just how steep a slide is that drop?
According to a new study from London-based Comparitech.com, which examined how companies who have been affected by a data breach have performed against the Nasdaq index, the impact of a data breach on company stocks is steeper than you might think. On average, Comparitech finds that company stocks linked to a data breach underperform the Nasdaq by 42% after three years.
The analysis covered 24 major companies who experienced a data breach resulting in the loss of over one million client records. Apple (AAPL) , eBay (EBAY) , Home Depot, Monster (MNST) , and Yahoo were among the company's tracked in the Comparitech study.
"Data breaches stain the reputations of companies both big and small, damaging the brand and reducing consumer trust, and sometimes the consequences can affect the company for years to come," notes Paul Bischoff, researcher and privacy advocate at Comparitech. "A data breach can harm both public sentiment and a company's competitive edge in the market depending on the type of breach."