Shopify Reveals Rogue Team Members Stole Merchant Data

Shares in Shopify (SHOP) fell 2% in Tuesday’s after-hours trading after the company revealed that two members of its support team were engaged in a scheme to obtain customer transactional records of certain merchants.

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Customer data exposed included basic contact information, such as email, name, and address, as well as order details, like products and services purchased- but did not include complete payment card numbers or other sensitive personal or financial information.

“Recently, Shopify became aware of an incident involving the data of less than 200 merchants. We immediately launched an investigation to identify the issue–and impact–so we could take action and notify the affected merchants” the company stated.

SHOP says it immediately terminated these individuals’ access to the Shopify network and referred the incident to law enforcement. It is now working with the FBI and other international agencies to further investigate the breach.

“While we do not have evidence of the data being utilized, we are in the early stages of the investigation and will be updating affected merchants as relevant” the company added.

SHOP also reassured users that the incident was not the result of a technical vulnerability in its platform, and that the vast majority of merchants using Shopify are not affected.

Shares in SHOP have exploded 140% year-to-date, and the stock scores a cautiously optimistic Moderate Buy consensus from the Street. The average analyst price target of $1,109 indicates a further 16% upside potential lies ahead.

Speaking for the bulls, RBC Capital analyst Mark Mahaney notes that Shopify has reached 1M+ merchants on its platform, which more than tripled from 325k merchants in 2016. He has a buy rating on the stock and $1,250 price target.

According to Mahaney, Shopify “is fully participating in the COVID-powered Online Retail Structural Acceleration at the same time that DTC [direct-to-consumer] Retail is inflecting up and at the same time that SHOP is gaining real traction with a series of new products & solutions – Payments, International, SFN, Shipping, etc.” (See SHOP stock analysis on TipRanks)