On Wednesday, eBay (EBAY) become the most recent company to be hit in what appears to be a rising wave of cybercrime. The company said that the attack compromised a small number of accounts, but they did ask nearly 150 million users to change their passwords, which sounds very serious, considering that eBay most recently declared its number of active users to be 145.1 million.
There has apparently been no rise in fraudulent activity as a result of the hack, and they do not believe any user credit card information or PayPal account information has been stolen, only customer names, passwords, email addresses, physical addresses, phone numbers and dates of birth. It may come as a relief to many customers that as of yet, the company has not reported that transaction histories were breached. As with most online transactions, eBay's users expect their transaction histories to remain private, and it would certainly upset many to know that someone, somewhere, had that history at their fingertips.
This is especially true since eBay does sell many things that might be considered sensitive in nature, though contrary to a popular urban legend, eBay does not allow users to auction away their virginities through the site. (Note eBay's adult-section policies here, including the prohibition of “Services that include any sexual/adult activity”).
If you are holding eBay stock, don't overreact. As long as there are no more unpleasant revelations to come, things don't look that bad. BUT… keep your eyes and ears open. It has become a depressingly common pattern for these hack stories to grow progressively worse, one day at a time. At the very first sign that eBay has left any unpleasantness unrevealed, dump the stock. Target (TGT) is down more than 10% from where it was trading before its nasty hack, and eBay is already down more than 10% from its March 2014 high. Investors don't deserve the pain they'll be in for if eBay turns out to be the new Target.
Julian Close has been a business writer since the first day of the twenty-first century, having written for PRA International and the United Nations Department of Peacekeeping. He graduated from Davidson College in 1993 and received a Master of Arts in Teaching from Mary Baldwin College in 2011. He became a stockbroker in 1993, but now works for Fresh Brewed Media and uses his powers only for good. You can see closing trades for all Julian's long and short positions and track his long term performance via twitter: @JulianClose_MIC.