Can Equifax Survive as a Company?

Last Friday, shares of Equifax traded down roughly 10% after news of a massive leak was disseminated to the public. In total, 143 million Americans may have had their most treasured personal details compromised, while scores more in countries such as the United Kingdom and Canada may have also had their details compromised.

Shares of Equifax continued to plummet throughout the week, trading down from roughly $120 off the open on Monday morning to a current level of $92.98.

The FTC (Federal Trade Commission) has announced a probe of Equifax. Two top executives of the company "retired" on Friday afternoon. Class action lawsuits have been filed. Congressional inquiries will be held. Heads will roll.

Having said all of that, Equifax still has a market capitalization of over $11 billion. Can the company do anything to save themselves at this point? Can they rebound?

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In addition to losing billions of dollars of market capitalization this week, Equifax showed themselves to be a bumbling, tone deaf company that has bungled every step of the fallout from this breach.

This has led to a complete loss of confidence from investors, as many view the company as completely inept as they attempt to quell the damage from the massive security breach.

Other credit bureaus attempted to capitalize on Equifax's woes, and this will likely end in much increased scrutiny on the industry as a whole. When the news of the breach was first revealed, Equifax's competitors were likely rejoicing in their woes - now, the entire industry is looking to undergo major changes.

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Shares of Equifax are down roughly 50% from their highs. Selling really started to accelerate in the second half of last week, as I would imagine that some major investment funds decided to dump their Equifax shares. With the end of the quarter coming, nobody is going to want to have shares of the company on their books.

The news flow regarding Equifax is entirely negatively right now, just as it was last week. Every bit of strength gets aggressively sold into and optimistic analysts are being mocked by angry shareholders.

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Can Equifax turn things around? Maybe, but it will likely take years and there will be plenty of pain in the interim.

There are literally thousands of other companies to invest in, which is why many investors are simply dumping Equifax and moving on. It's just not worth the headache right now.

Disclaimer: No position in EFX

Filed under: General Knowledge