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Below-Expected Earnings For Google Posted Early, Trading Halted
An anonymous reader writes with this snippet from the BBC: "Trading in Google shares has been suspended after the internet giant released its third-quarter results early by mistake. Google blames financial printing firm RR Donnelley for filing an early draft of the results, which had been expected after the closing bell. Shares in Google were down 9% when trading in the stock was suspended. Shares had fallen as much as 10.5% at one stage. In a statement, Google said: 'Earlier this morning RR Donnelley, the financial printer, informed us that they had filed our draft 8K earnings statement without authorisation... We have ceased trading on Nasdaq while we work to finalise the document. Once it's finalised we will release our earnings, resume trading on Nasdaq and hold our earnings call as normal at 1:30 PST.'"
What I'd do, is wait for all the panic selling, pick up some Nov or Dec calls, and when the panic ends, folks will probably buy back in and push the price up a little. Or you could just go long.
Panic selling always overshoots down past where the price will eventually settle.
Oh dear
Income this quarter is lower than the same quarter last year but overall revenues are up 45% from the same time last year. So that means that its income is less in proportion to how big it is, 19% of revenues last quarter against 37% last year. Google as a business is getting bigger but its profits are dwindling. Bigger but not better
Moto is loosing money (the rate does seem to have slowed) on top of the 12 Bn purchase price
Why in earth Google is releasing the new Nexus phone made by any one else other than Moto doesn't make any sense to me at all, apart from google not wishing to piss off other OEMs who aren't raking it either.
Othe contributing factors I'd imagine are people using apps instead of browsers, so there's less opportunity for google to place ads directly and ad rates aren't as lucrative a they once were.
As for the timing. Today or tomorrow? Wouldn't the stock have taken a dive anyway? Just off the top of my head thoughts
Watch those corners
The big deal is announcing during the day. You're supposed to announce when its closed, so people can react at the same time the next morning. That's a big fuck up that could bring the SEC down with fines.
I still have more fans than freaks. WTF is wrong with you people?
Traders are panicky sheep. Or lemmings. Or whatever. When these numbers get released during the day, everybody runs to SELLSELLSELLOHGODSELLIT. If they wait to release the numbers after the closing bell, the markets have all night for people to calm down and realize that the report isn't all that bad after all, and there's less downward pressure.
Everything is better with chainsaws.
October 2012 will be remembered as the worst month for operating systems in a long time
Windows 8, Adbuntu 12.10, iOS with worse maps and of course new Crapbooks from Google. Dump your shares, invest in bitcoins or Iranian Rials.
This seems really silly to halt trading. If people are dumping their stock due to speculation or accidental reports, let them do it! This just means that others can buy the stock while it's down and should the actual report come in that and everything be ok, well those early speculators just lost out.
It just seems like by having trades be halted if things get too crazy or even backing out trades if they were due to HFT bugs, you're removing all the risk and just enabling dumber and bolder investment strategies.
perhaps they shouldn't be allowed to trade.
Everyone expects reports after the bell. That way, there's time to actually read and reflect, and everyone starts on a similar footing when trading resumes in the morning. Just as importantly, everyone knows and expects that they'll start on a similar footing in the morning.
If it were released during the trading day, there'd be pressure to analyse the document (and I use the phrase loosely here) as quickly as possible, so you can sell while it's still high or buy when it's still low, before most people have had a chance to process the new information. Most of the time, this means jumping on a single factor and reacting strongly.
Of course, then other people wouldn't actually need read the document. They would just see the line trending, say, up and then figure that someone who can analyse better and more quickly than they has seen a value increase and is now buying. So they would buy. And why not? As long as they're on the rising edge, and can recognize a peak/plateau, they can sell at the peak and still make money. So this compressed window leads to panicked decisions based on incomplete information which is multiplied across the market. Very disruptive.
Now, imagine if the report were not only released during trading, but _unexpectedly_ so. Not only would you have information, you would have information that the majority of actors don't have. You would have an advantage over them, one that will evaporate in a matter of minutes or hours. Once the trading halted for the day, the advantage would be lost. So they would move even more quickly and panicked than if they had been expecting the report during trading (which, of course, no one was).
The phenomenon you describe -- trying to profit off of the correction when the initial trend is proven to be based on incorrect assumptions -- would then drag the trading artificially in the opposite direction. It's like kicking and oscillator. And, of course, there's no reason that a smaller group of investors couldn't capitalize on the over-correction, and another group on the re-correction, and so on. Maybe the price "rings" for a long, long time before it settles to a more representative value. Maybe it gets so low or high that non-linear effects ("buy at ..."/"sell at ..." directives) come into play and either dampen or excite the oscillation further. Maybe the stock just bottoms out -- that is to say, the investors buying or selling lose enough money at once that they can't make call, even though the stock they hold may have value.
It's hard to say. But considering that it's all an artifact of traders trying to capitalize on the stupidity of other traders, and not at all a matter of the real price of the stock, it sounds like the kind of thing you want to discourage as much as possible.
On a related note: based on the chaos caused by automated trading routines of late, I think we can expect more limits and delays on trading to be mandated in the future.
The main thing you have to remember about aggressive traders is that they're actually both smarter and dumber than you'd expect. That is, they're smart enough to recognize that most of their money is not made by spotting winners or losers early enough to get on the winning team. No, most of their money is stolen in fits by outracing other investors when things suddenly change. If we're lucky, they usually have a counterpart somewhere who is responsible for shepherding a reserve of cash, slowly built up by investing in solid companies as they build, so that the life and death of the aggressive portfolio is not also the life and death of the company.
The aggressive traders know a lot of their job comes down to timing, that the value they gain and trade is temporary, and that eventually the whole thing will melt down around them. Eventually, they will be the slow guy getting beat by faster guys. The large scale and small scale objectives are similar: get in on the rising edge, get yours, and get out before the whole thing goes to hell. Collapse is not an "if", it's a "when". The first thing they look for is always "when do I pull out?"
We would need either stock or some sort of bond, but a stock market in it's current form is not at all necessary.
"GOOG" posted a third-quarter profit of $2.18 billion, or $6.53 a share, down from $2.73 billion, or $8.33 a share, a year earlier. Excluding stock-based compensation and other items, profit fell to $9.03 from $9.72 a share. Revenue, excluding traffic acquisition costs, improved to $11.33 billion.
Analysts surveyed by Thomson Reuters expected earnings of $10.65 a share and net revenue of $11.86 billion.
Total costs jumped 71%.
Not good. Profits are down, and costs are way up. Need to look at the 10-Q filing to find out what the "traffic acquisition costs" are. Earnings excluding stuff are a form of spin control. The real number is the GAAP earnings, which will appear on the 10-Q.
The numbers indicate that Google is buying traffic, and it's not helping profits. That's a sign of trouble. It's not yet clear how bad the trouble is.
Looking ahead, at some point, we're going to hit "peak online advertising", where total spend on online advertising stops growing. At that point, everybody whose business model is "ad-supported free" is in competition with everybody else in that model, fighting over a pie of fixed or declining size.