Question for you all, is Medibank really worth 19% less due to the news of its cyber incident?
After an extended trading halt it's now trading 19% lower.
The Gov have already said their limited in how much they can fine companies for data breaches so what's the real financial impact?
I see a lot of repetitional damage though, will you move your private health from Medibank? Or is the fear more about upcoming class actions?
According to its market capitalisation, yes.
In 5 years we will know if it's over or under valued.
is Medibank really worth 19% less due to the news of its cyber incident?
Who knows?
The better (and more apt) question is: "Did the recent cyber incident (and growing public concern about the cybersecurity practices of big companies of late) shake investor confidence to where they're willing to get 19% less than they could have gotten yesterday just to close positions immediately so they can limit their exposure to whatever mess may (or may not) happen next?"
Just because the ticker says that a company is worth $however.much doesn't mean that it's actually worth that. The stock market reflects sentiment more than fundamental worth.
Just because the ticker says that a company is worth $however.much doesn't mean that it's actually worth that. The stock market reflects sentiment more than fundamental worth.
Quite the contrary. The ticker shows exactly, precisely what the company is worth at that time. Is their long term value? Maybe, but the balance of people with a short term focus and lack of belief in that value resulted in today’s price.
The sentiment impacting value is the ‘worth’ of the company.
If a 100oz gold bar sells for $40 because everyone believes it is haunted, well, that is what it is worth. If you don’t believe in ghosts and buy it for $40, you might think you got a bargain, but if you can’t convince anybody you are right, it is just worth $40 (likely less, if you were the only one prepared to pay that much).
I'd buy it for $40 and melt it into 1oz pieces.
Great, now you have 40 haunted problems! ;~)
Sorry I find your anecdote for value, worth and perceived value a little faulty.
I'm not sure I follow. The gold example was just to show even when something would be "worth" many thousands of dollars normally, if circumstances change, then what it is worth is only what the market will pay. And it doesn't matter if you agree or not with how the market is pricing an item, the market sets the value
People argue all day about intrinsic value of shares not being reflected in the prices, but the only way to tell who is correct is what the market will pay.
Bang on the (haunted) money and (as usual) some great analysis.
I concur. This may be a ploy to revalue to actual worth or write off losses or funny business.
only 19%? they got off easy considering they spilled the beans on all 4 million customers
Probably oversold at this stage. A lot of market activity are bots and they are usually driven by momentum.
Who gonna trust Medibank after the hack.
I can buy the argument that a company that gets popped will have great care going forward, but these guys don’t even know what is going on now. Everyday they uncover worse problems.
I think it may be justified, they really haven't grown or lost their customer base since they were privatised in 2014 which tells me they have probably been able to ride the back of customers who were/are too loyal to shop around and have enjoyed the trustworthy perception it has as a former government owned company. But that trust has just been rocked, how many will leave and I think once they do Medibank will have a very difficult time winning back that market share. I also think it's more likely that their younger customers will leave (aka the profitable ones).
Read their press releases, it's going to cost them $35m cash to fix their IT systems, that's $35m that does not go to shareholders ;)
The market has determined that is worth a 19% reduction :P
it's going to cost them $35m to fix the IT system
Plus more marketing cost
Plus future compensation to victims. Even if only 0.1% of the customers have their wealth stolen that is still 4000 people to compensate
God forbid they will raise premiums later next year
The remedial cost is somewhat academic to the share market - it is the reputational damage they have suffered. This will lead to a reduction in policy holders and in turn their profitability
"Short-term, the stock market is like a voting machine, but long-term it acts like a weighing machine" - Ben Graham
Was the price last week fair value for the stock? Todays price might have all the fat, rainbows and blue sky removed from it
it's been reported in the media that medibank has no insurance to cover such events. the irony …
Unlike Optus, Medibank is regulated by APRA. APRA will likely 'punish' Medibank with additional capital requirements. Where will that capital most likely come from? Higher premiums! That's right, Medibank customers will get to pay twice, possibly three times. Once, in the form of lost data, twice because the fines, penalties, class actions etc could be enough to call Medibank's financial viability into question (in which case claims won't be paid) and thirdly through higher premiums as Medibank tries to recover the losses mentioned above plus build an additional capital buffer.
I know that I won't be feeling Better until I've switched.
It's possible that the stock price may revert back to a higher level (still lower than last week's price). They will definitely have lower revenue in their forecasts as people leave, which does justify a lower stock price but part of the drop is just investor fear.