Snowflake (NYSE:SNOW) is seeing shares decline amid a data-compromising controversy. Indeed, an unknown number of users may have been affected by the so-called Snowflake data breach, which appears to have stemmed from the use of single-factor authentication (SFA) as opposed to more rigorous multi-factor authentication (MFA). Now, SNOW stock is bearing the brunt of the damage today.
At the beginning of the month, Australian authorities warned about the increased threat of cyberattacks targeting Snowflake customers. On its website, the Australian Signals Directorate (ASD) stated that it was “aware of successful compromises of several companies utilising Snowflake environments.” As a precaution, the ASD said that those who use the platform should reset their credentials and enable MFA.
On June 5, TechCrunch then reported that the cloud-computing specialist issued a brief statement acknowledging “potentially unauthorized access” which impacted a “limited number” of customer accounts. Critically, the company did not specify which accounts had been compromised. However, Snowflake did say that it “found no evidence there was a direct breach of its systems.”
Instead, part of the problem centers on a lack of enforcement regarding MFA. Snowflake customers are allowed to manage their own environment security, meaning users aren’t forced to use MFA despite it being superior to SFA.
Snowflake Data Breach Casts a Cloud Over SNOW Stock
What has particularly sparked the ire of customers is that the cloud specialist should have known about the probability of the Snowflake data breach well before it happened. Despite more customers coming forward, the company has been reticent about providing additional details. Notably, one former Snowflake employee’s “demo” account suffered a breach because it only utilized SFA protections.
Last Friday, management said that its position on the matter “remains unchanged.” Technically speaking, because the Snowflake data breach impacted customers who by their own volition chose SFA, this makes sense at face value. But the problem for SNOW stock is that, in the trailing month, shares are down about 19%. Clearly, investors aren’t letting the company off the hook.
Because Snowflake serves some of the largest international corporations — encompassing the banking, healthcare and technology sectors, among others — it’s critical that the enterprise be more forthcoming. Earlier today, Snowflake also stated that it will force customers to utilize MFA to prevent more intrusions moving forward. Still, with SNOW stock down about 3% on Monday, investors don’t appear to be satisfied with the response.
On the date of publication, Josh Enomoto did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
