Turns out Robinhood (HOOD) had an outsider literally looking under the hood recently.
On Monday, the company disclosed a data security incident which had taken place late in the evening on November 3. The trading app experienced a security breach in which an unauthorized party got hold of a list of approximately 5 million people’s email addresses while a separate group of approximately 2 million people had their full names exposed. The systems intruder demanded an extortion payment after socially engineering a customer support employee by phone and gaining access to a number of customer support systems.
The company said that only around 310 people had personal information, including name, date of birth, and zip code revealed. Among those, around 10 customers had more extensive account details exposed. However, the incident has not caused customers any financial loss, and Robinhood believes the attack has been contained. Following investigation, the company claims that no bank account numbers, debit card numbers or social security numbers were revealed.
The attack comes shortly after disappointing third-quarter results, with revenue dropping sequentially from the second quarter as the result of a big sequential downturn in cryptocurrency transactions.
Deutsche Bank’s Brian Bedell expects the incident to add “modest pressure” to HOOD shares which have now dropped below the June IPO price, although the long-term implications are currently still hard to quantify.
“At this time, we think it is highly uncertain as to what extent this incident will impact Robinhood’s customer attrition or organic growth rates,” the 5-star analyst said. “We reiterate our investment thesis on Robinhood, that great potential can come with high risk.”
To this end, the analyst remains on the sidelines with a Hold rating and a $40 price target, suggesting shares have room for 18% upside from current levels. (To watch Bedell’s track record, click here)
The rest of the Street has a more positive take; the stock has a Moderate Buy consensus rating, based on 7 Buys vs. 5 Holds and 1 Sell. Going by the $45.58 average price target, shares will be changing hands for a 20% premium a year from now. (See Robinhood stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.