LinkedIn (LNKD) was hacked in early June, and over 6 million passwords were stolen and published as encoded packages on an underground hacker site. The company reacted very quickly and strongly to alert users who might have been affected by the security breach, and the stock is realizing the benefits of being open and tackling the situation head-on.
In fact, the stock has been rallying since the beginning of June, and they saw an accelerated momentum even after being sued in a class action suit for the security breach. A woman brought the suit against them, claiming that the fiasco was in violation of their own user agreement.
Also, the company announced today that their agreement with Twitter has reached its end. The site will no longer feed Twitter updates through to user pages.
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LinkedIn’s stock did not see much (if any) negativity from the security fiasco, likely because of how quickly and well they handled it.
If the situation happened to other social networks or job-hunting sites, they might not have chosen to handle the situation the same. They could have suppressed the publicity of it, and hoped to fix it before many users found out.
LinkedIn shows that being honest, clear, and proactive in a crisis can help mitigate user and investor concerns.
Use Kapitall tools to analyze LinkedIn and some of their competitors. Do you think any of them would have handled the situation as well as LinkedIn did?
Interactive Chart: Press Play to compare changes in market cap for LNKD, FB, MWW, GOOG, and YHOO:
Interactive Chart: Use the Turbo Chart to compare the stock performance of LNKD and FB against the performance of the S&P 500 Index (SPX):
(Written by Danny Guttridge)