|Wed July 2 2014 16:52:02|
Wall Street Estimates Impact of eBay Security Breach
By: Ina Steiner
It isn't so much the security breach we've heard so much about that directly impacts eBay sales, but rather, fallout from its public announcement about the cyber attack on May 21st. Individual sellers can see how it is impacting their own sales, but Wall Street analysts are trying to estimate how exactly it is impacting eBay's bottom line.
Negative media attention about the breach likely gave some shoppers pause before logging in to shop, and adding to the potential for stopping shoppers in their tracks is eBay's "password reset" requirement. After revealing that criminals had accessed its user database, eBay required all members to reset their passwords before they could sign in.
In a new report out today, analyst Bob Peck of Suntrust said the full impact of the password reset could take several quarters to play out. He wrote, "We suspect the impact from the password reset to again be in the low-single digits (again some commensurate impact to PayPal),... We also again expect some incremental expense."
Peck makes some interesting points - he believes the password reset is most likely to disrupt "casual" uses of eBay. He thinks regular users will tolerate the added friction of the password reset. And, he says, new users would go through an authentication process anyway. Interestingly, he doesn't directly address the impact of any lingering concerns members (or new users) may have over eBay's security.
Last week we explained how Colin Sebastian of Robert W. Baird & Co. viewed the impact of the breach, including a graph showing the rolling 4-week growth of eBay Gross Merchandise Volume.
EcommerceBytes readers reported on the impact of the breach on their sales in a survey, with 91 percent reporting that sales remained lower than pre-breach announcement levels.
This week, we learned that "tens of millions" of eBay buyers and sellers have reset their passwords. Whether eBay will provide details when it announces second-quarter earnings later this month is not known, but it appears analysts are quite interested in knowing more.