Should Credit Card Companies Be Worried About Target, Neiman Marcus Hacks?

Joe Goldman |

Tens of millions of consumers have had their credit card information stolen. Should investors in credit card companies be worried as well?

Target (TGT), Neiman Marcus Hacked

The onslaught of credit card breaches has been one of the biggest stories on Wall Street of the last year. Target (TGT) , Neiman Marcus, and some others have had their networks hacked, losing the credit card information of millions of consumers to the hands of computer criminals.

The F.B.I. has estimated that approximately 20 credit card hacks have occurred over the previous twelve months, none of which were bigger than Target's. The hack resulted in the theft of over 40 million credit and debit card records, which naturally effected consumer habits during the critical holiday shopping season.

Most of the talk on Wall Street has been about the retailers. Investors and analysts are hard at work trying to figure out how these breaches will affect the bottom lines of the big retailers. Target decided to mark down every item in all of its stores for a brief period of time, which will surely hurt profits. This is combined with the inevitable reality that some customers will simply be too nervous to entrust Target, Neiman Marcus, and other hacked businesses with their credit card information.

Should Visa (V), MasterCard (MA), and American Express (AXP) be Worried As Well?

However, little has been discussed about how the credit card companies could be affected. After all, if consumers begin to incur charges that they did not authorize, the credit card issuer is typically on the hook to cover the charge and seek out the people responsible — a costly endeavor.

However, the reality of the situation is that credit card companies like Visa (V) , MasterCard (MA) , American Express (AXP) , Capital One (COF) , and others will likely be affected minimally thanks to prompt and effective reactions from consumers and banks.

JP Morgan (JPM) announced that it is already replacing 2 million cards directly affected by the hack, according to CNN. Bank of America (BAC) , Wells Fargo (WFC) , and others have also announced that at-risk credit card replacements have picked up dramatically, but did not release specific numbers.

Additionally, tens of millions of consumers who have opted to not order a new credit or debit card have changed their pin or reset their pins or account numbers. The card issuers have reportedly been very proactive in facilitating the protection of credit card info, so shareholders should breathe easy about huge potential losses.

FBI Watching Major Credit Card Companies

However, the situation is nonetheless one to monitor carefully. Even the FBI is unsure of the magnitude and severity of the previous hacks will be and hasn’t the faintest idea how many more hacks will occur in the coming months. Therefore, investors in the banks and credit card companies should keep a close eye on new developments, but should by no means dump their shares en masse. Perhaps online and information security companies could be ones to watch in the coming year.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:


Symbol Name Price Change % Volume
JPM JP Morgan Chase 86.70 0.46 0.53 28,295,985
AXP American Express Company 76.62 -0.26 -0.34 3,454,338
MA Mastercard Incorporated 108.70 -0.01 -0.01 4,661,858
V Visa Inc. 81.17 -0.20 -0.25 7,291,220
BAC Bank of America Corporation 23.01 0.09 0.39 161,930,864
COF Capital One Financial Corporation 88.85 0.96 1.09 2,327,814
WFC Wells Fargo & Company 55.31 0.81 1.49 37,231,593
IMIAY IMI Plc (United Kingdom) ADR (New Sponsored) 25.97 0.00 0.00 0


Emerging Growth

GSV Capital Corp

GSV Capital Corp is an externally managed, non-diversified closed-end management investment company. The Company has elected to be treated as a business development company.

Private Markets

BioSculpture Technology, Inc.

BioSculpture Technology, Inc. (“BST”) is a commercial-stage medical device manufacturer of liposuction surgical instruments for surgeons. It offers the FDA-cleared Twin Cannula Assisted Liposuction ("TCAL") Airbrush Liposculptor II® controllers, Airbrush®…

Cross Campus

With over 500 members and operating 80,000 square feet by summer 2016, Cross Campus is one of the country’s top ten shared, collaborative office or "coworking" operators in the US.…