LinkedIn has been hacked.
Reports surfaced Wednesday that 6.5 million passwords of users on the leading corporate social networking website were compromised. LinkedIn (LNKD) is investigating the breach.
LinkedIn is resetting the login details on the affected accounts, and members should be receiving an email from the company with the instructions for getting back online with new passwords. The company is emphasizing that it's not including any links in the email. Savvy Internet users know better than to click on links in an email pretending to be from a credible source, but you can never be too careful.
LinkedIn is actively addressing its security issues. Still, despite the quick reaction, this is a black eye for LinkedIn, even if it's primarily a free website for white-collar professionals.
Adding Some Perspective
Those 6.5 million compromised accounts may feel like a big number, but it's actually just 4% of the 161 million professionals who were on LinkedIn as of the end of the company's latest quarter.
But any time millions of people are inconvenienced -- and countless millions more start to worry -- it doesn't really seem to matter that an issue affects only a small percentage of a website's users. The power of scary headlines can do harm to a popular Internet company far greater than the hack itself.
If users begin worrying about the security of popular website destinations, a slowdown in traffic won't come as much of a surprise.
LinkedIn has been in a good groove of late. Sure, the stock may seem expensive on an earnings-based valuation, but have you eyeballed its growth lately? Revenue climbed 101% to $188.5 million in its latest quarter, making this the seventh consecutive quarter in which revenue has more than doubled. Adjusted earnings nearly tripled, soaring 191%, even faster than the site's blazing fast top line growth.
In other words, there are a lot of reasons LinkedIn will want to make this story to go away soon.
So far, there doesn't seem to be the same kind of buzz building over the reportedly similar hack of 1.5 million love-seeking members of eHarmony.
LinkedIn will have to beef up its defenses: It's going to be a logical target for further attacks given its target audience and the nature of its business. When you're drawing a clientele of well-to-do professionals and aspiring well-to-do professionals, your accounts are naturally a tempting target.
Being able to properly answer the question "How will you keep member data secure?" will be vital if LinkedIn is going to ace its next set of job interviews.
Motley Fool contributor Rick Munarriz does not own shares in any stocks in this article. The Motley Fool owns shares of LinkedIn. Motley Fool newsletter services have recommended buying shares of LinkedIn.
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