Some of the biggest names in Las Vegas have fallen victim to cyberattacks, resulting in disruptions to operations and negative impacts on stock prices. With the rise of ransomware attacks and increased transparency measures from companies, investors should prepare themselves for more incidents like these.
MGM Resorts International Cybersecurity Issue
MGM Resorts International (ticker: MGM) recently announced a cybersecurity issue that has affected its systems. Hotel and casino operations have been significantly disrupted as a result. The company submitted a formal report to the Securities and Exchange Commission (SEC), confirming the material impact of the outage. This news has caused concern among investors, leading some to sell their stocks.
Caesars Entertainment Pays Ransom
In another significant development, Caesars Entertainment (CZR) paid approximately $15 million of a $30 million ransom demanded by hackers following a recent cyberattack. The company is expected to file a notice of material impact with the SEC soon. Although not yet reported, this incident will likely have repercussions on the company's stock price.
Decrease in Stock Prices
As a result of these cyberattacks, both MGM Resorts and Caesars Entertainment have experienced a decline in their stock prices. Since MGM's breach was made public earlier this week, both stocks have dropped by approximately 5% since the previous Friday. This negative trend reflects the growing concern among investors regarding the impact of cyberattacks on these companies.
In this era of increased cybersecurity threats and the need for transparency, investors should be prepared for more instances like these. It is crucial for companies in all industries, including the entertainment and hospitality sectors, to strengthen their cybersecurity measures to mitigate potential risks.
Ransomware Cyberattacks Surge in 2023
According to analysts at Chainalysis, a renowned blockchain research firm, ransomware cyberattacks have made a powerful comeback in 2023. In a midyear update released in July, they reported that these attacks had reached record-breaking numbers, highlighting the alarming rise of this criminal enterprise. Notably, most ransoms are paid using popular cryptocurrencies such as Bitcoin or Monero, further deepening the involvement of digital assets in these illicit activities. Campbell Harvey, a finance professor at Duke University's Fuqua School of Business, predicts that ransomware damages could exceed a staggering $30 billion this year.
Despite their wide-ranging impact, ransomware attacks often remain hidden from public view. Only a mere 11.1% of known attacks on US companies are voluntarily disclosed by the affected organizations themselves, as revealed by Harvey and his team of researchers.
There is hope for increased transparency in the near future, although MGM's recent disclosure serves as a cautionary tale. The Securities and Exchange Commission (SEC) has introduced new regulations concerning cybersecurity, which will come into effect by the end of this year. As part of these regulations, companies will be required to provide detailed descriptions of their cyber programs in their annual filings. Additionally, any significant cyber incidents must be promptly reported under the new regime, ensuring a swifter response to potential threats.