Yahoo Hack 2016: What the Newest Breach Means for YHOO

Yahoo Hack 2016Yahoo Hack 2016: A newly discovered data breach at Yahoo! Inc. (Nasdaq: YHOO) sent the stock tanking today (Thursday) on concerns it might jeopardize its pending deal with Verizon Communications Inc. (NYSE: VZ).

The Yahoo stock price dropped nearly 5% to below $39 per share in morning trading today. Late Wednesday, the company announced it had identified a new breach separate from the massive one announced earlier this year.

More than 1 billion user accounts were affected in the latest breach, which actually occurred back in 2013. That makes the 2013 breach larger than the huge Yahoo hack of 2014, which affected roughly 500 million users and was done by a state-sponsored actor.

Company officials said it is not clear who is responsible for Yahoo hack 2013.

What Yahoo does know is that unidentified hackers broke into its network and stole data including names, email addresses, telephone numbers, dates of birth, and passwords.

Yahoo users are once again urged to review all their online accounts, change their passwords, and change security questions.

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Users are also advised to avoid clicking on links or downloads from suspicious emails, and to be vigilant about providing personal information from unsolicited communications.

Users are worried about what the hack means to them personally. Meanwhile, Yahoo is worried about what the breach means for its pending deal with Verizon, expected to close in early 2017.

Here's what's next for the Verizon-Yahoo deal and for the Yahoo stock price in 2017...

What Yahoo Hack 2016 Means for YHOO Stock

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On July 23, Yahoo agreed to sell its advertising and search units to Verizon for $4.83 billion.

At the time, Yahoo noted that there were no material adverse effects on its businesses even though certain language in the merger agreement addressed security breaches and unauthorized access.

That gives Verizon some protection.

In October, bearing in mind the 2014 breach, Verizon signaled it could consider that hack as a material event that could allow it to change the deal terms.

The companies were discussing the first reported breach when the second one was discovered.

Reportedly, Verizon is keeping all its options open. That includes renegotiating the deal's price (and perhaps getting a bargain) or just walking away.

"We will evaluate the situation as Yahoo continues its investigation," Verizon said in a statement on Wednesday. "We will review the impact of this new development before reaching any final conclusions."

Verizon is likely trying to determine how much these breaches have hurt Yahoo's value, as well as its fading reputation. Once deemed a pioneer and leader in the internet space, Yahoo has been losing market share, swagger, and users.

At $39.49, Yahoo shares are up 18.73% year to date. But we suggest avoiding Yahoo stock going forward, as there is too much uncertainty surrounding the severity of the Yahoo hack on YHOO's value.

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