What: Shares of Sprint (NYSE:S) fell as much as 9.8% on Monday morning, following news that Fiat Chrysler Automobiles is recalling 1.4 million trucks and cars with infotainment systems that may be vulnerable to hacking attacks. Fiat Chrysler's in-car systems are known to connect to Sprint's wireless networks for content delivery and system updates. While not strictly a Sprint problem, some investors are quick to back off of potential hacking scandals until the company is proven innocent.
So what: The Fiat Chrysler recall is a very big deal, covering recent versions of high-end models such as Dodge Viper, Dodge Challenger, and Jeep Cherokee. The company must offer to buy back over 500,000 vehicles, and will also pay as much as $105 million in penalties for dragging its feet on the recall notification process. Again, this isn't necessarily Sprint's fault, but the telecom is caught in the collateral damage of an issue involving those infotainment systems.
Now what: I don't expect this particular Sprint discount to stick around for very long, given the tenuous link between this company and the triggering Fiat Chrysler event.
"This is not a Sprint issue but we have been working with Chrysler to help them further secure their vehicles," a Sprint spokesperson told Bloomberg. Sounds to me like the company is doing all the right things here, offering its technical expertise to help a business partner at a time of need.
Serious Sprint investors should ignore this piece of non-essential news, and may even want to pick up shares on this temporary discount. We are, after all, looking at fresh 52-week lows based on the flimsiest of business reasons.
The real news will come next Tuesday, when Sprint reports second-quarter earnings. Food for thought: Sprint's never-ending turnaround efforts have started to work under new CEO Marcelo Claure -- even if the company still tends to miss Wall Street's estimates.
Anders Bylund has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.