Robinhood shares plummet after data of its 5 million users was hacked

Robinhood users hacked

Shares in Robinhood (HOOD) fell 3.2% in off-trade after the company reported a hacking attack that put the personal data of 5 million of its customers into the hands of attackers. Robinhood said no customers suffered financial losses.

Online broker Robinhood (HOOD) informed its investors on Monday after the close of trading of a data security incident" that occurred late in the evening of 3 November.

Shares in Robinhood, which lost 29.6% in the last quarter but was up 9% in the last week, fell 3.2% on the news.

"Some unauthorized third-party customers have limited access to your personal information," Robinhood said in a press release. "As the results of the investigation show, the attack has subsided, the public insurance number, bank account number and credit card number have been leaked, and customers do not believe there is any financial harm from the incident."

"After we localised the intrusion, an unauthorised party demanded extortion."

"We are in the process of disclosing relevant information to affected people."

Such incidents are a big blow to the reputation of young companies that are at the beginning of their journey to gain the trust and favour of customers.

In addition, this is not the first time Robinhood's security practices have come under scrutiny. The US Securities and Exchange Commission's (SEC) Office of Examination "identified flaws" in Robinhood's security practices during an earlier audit related to unauthorised access to customer accounts and identity theft. Robinhood previously said it had corrected these deficiencies.

The incident could worsen the current situation Robinhood's business is in. Last month, Robinhood reported quarterly losses and revenues worse than market analysts' forecasts, as well as the loss of 870,000 customer accounts in the three months ended 30 September.

Robinhood's shares are now trading around the price of its IPO in July 2021. Investors have been speculating in recent days about Robinhood's plans for its crypto platform, including whether the meme-cryptocurrency Shiba Inu will appear on it.