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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.
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.
in for 100 shares at $694.38. It'll be over $700 by COB tomorrow.
how are they going to report drastically different earnings a few hours later? the quarter ended over a month ago, it's not like they can just push some business into the release to meet the numbers.
A pet peeve of mine (and one of my biggest gripes with Google News) is promoting news sources that are nationally or geographically far removed from the event in question. In this case, I noticed the British spelling of "finalise", which directed my attention to the fact that the linked article is from the BBC. So then I assumed this was in some way related to the London Stock Exchange, or it was the UK division of Google that prematurely released the figures. However that is not the case as this was indeed suspended on NASDAQ and involved the parent Google company.
Better known as 318230.
Is the BBC anglifying the spelling of a U.S. company's report, or are the people at Google huge anglophiles?
No, it's just that Americans don't speak proper English so some kind hearted soul took pity on Google and corrected their spelling.
Only to idiots, are orders laws.
-- Henning von Tresckow
Just in time for the 25th anniversary of Black Monday crash, where the Dow lost 22% in one day.
"I bless every day that I continue to live, for every day is pure profit."
how are they going to report drastically different earnings a few hours later? the quarter ended over a month ago, it's not like they can just push some business into the release to meet the numbers.
It's not that the numbers will change. It's that you don't just surprise people with numbers, period. Release it after the markets are closed so everyone effectively gets full information at the same point in time. As for "finishing" the document, it may just be a matter of editing, etc. I highly doubt there would be material changes made this late.
perhaps they shouldn't be allowed to trade.
Actually, authorisation with an s IS English. Authorization is American.
That's why a useful strategy with fundamentally sound stocks is to play the counter-cyclical game: When the market is going "SELLSELLSELLOHGODSELLIT", that's your signal to start looking for a price that you will buy at. When the market is saying "This is the best company to ever exist!", start selling.
Of course, the risk in this strategy is that the reason the market is going SELLSELLSELL is because the stock is no longer sound. But that's unlikely if it's a company that actually makes something.
I am officially gone from
Traders are panicky sheep.
Was that augmented by panicky algorithms doing an impression of the robot scared by Chewbacca? Rawr! Squeeeeeee..... zip.
The Z/S is an American/British English thing.
Some analyst somewhere just got canned. Hard core canned to like "You don't even get to keep the stuff on your desk GTFO"... like thrown from a window canned.
Ain't capitalism grand?
Don't you mean "Ain't stock markets grand?"?
There is no requirement for capitalism to make use of stock markets.
Don't know something? Look it up. Still don't know? Then ask.
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.
It's a Cold War that's been going on since US independence.
I'm Australian, so technically i can only "authorise", but due to invasion by US forces through the idiot box, many of my fellow (particularly younger) countrymen (or "country people" for the political correctness trolls) are surrendering to ignorance and defecting.
At the end of the day it probably doesn't really matter anyway due to the impending "New World Order" and all...
True. But the big exchanges don't allow that, you do that by trading off exchange. Basically, the government never made selling stock off the exchanges illegal, so people use that as a workaround. So the only after hours rule doesn't stop everything. However, after hours trading is a fraction of what happens during the day. So the rule isn't perfect, but does help. Also, after hours trading doesn't always predict what will happen correctly- after Jobs died, APL was down after hours, but went up on open.
I still have more fans than freaks. WTF is wrong with you people?
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?"
Traders are panicky sheep.
I would put it differently. People are panicky sheep. Traders are gamblers. Nothing more. Traders are gambling on how other people are going to respond.
In the absence of dividends, what's a stock?
Of course this is somewhat less than true now with all of the algorithmic trading and high-frequency trading that goes on. Nonetheless, at its core, the market is about emotion. Traders make--and lose--money based on emotions, not facts and fundamentals.
As long as they spell it with a zed and not with a zee all is not lost.
English? You mean the language they speak in England? The language that spells authorisation with an S, not a Z?
Mobile phones and tablets are sucking the profit out of them. They dont have a vertical supply chain of factories and stores like Apple.
Strange story, that. I've been investing since I was a teen, and did paper trading in grade school from stock tables.
On Black Monday, after having just written an Economics paper for Capilano University on ethical investing, for which I'd researched true and tax book value for corporations, I realized that Apple was selling at such a low rate you couldn't lose if you bought it.
I phoned my grandmother and told her not to panic, and to put $10,000 in Apple stock. She did. Later she gifted part of it to me. I later sold parts of that and bought and sold Microsoft stock from the proceeds, which became the 20 percent downpayment on my first house.
Best stock day ever.
This led me to a later decision to buy 600 shares of Ford on what turned out to be the absolute bottom of the market. Made a killing on that.
From risk, comes opportunity.
-- Tigger warning: This post may contain tiggers! --
You do realize that the English spoken in the Appalachian Mtns. more closely resembles the English spoken in Great Brittan in the 1600's then the English that is spoken in Great Brittan today.
Thats right, you all sounded like a bunch of flipping hill billies.
Extensive research has been conducted since the 1930s to determine the origin of the Appalachian dialect. One theory is that the dialect is a remnant of Elizabethan (or Shakespearean) English that had been preserved by the region's isolation.[2][3]
http://en.wikipedia.org/wiki/Appalachian_English
Don't even try... I'm a German, I just thought it would be fun to 'take the piss' out of you guys as my friends across the channel call it. It is nice to see that (most) Americans can still take a joke.
Only to idiots, are orders laws.
-- Henning von Tresckow
If you read this
Trading in Google shares was suspended for two-and-a-half hours after the internet giant released its third-quarter results early by mistake.
you would have thought that it was Google who had released its third-quarter result, mistake or not.
But if you read this
Google blamed financial printing firm RR Donnelley for filing an early draft of the results ...
or this, from http://www.guardian.co.uk/technology/2012/oct/18/google-shares-suspend-email-22bn
Company results circulate internally for several days as they are being prepared for public release to strict timetables, normally under strict secrecy. Leaks of the figures are extremely rare, but on this occasion Google tersely blamed financial printers RR Donnelly for filing its draft third quarter results "without authorisation".
you would be getting a much clearer picture of what had transpired.
I don't know why BBC chooses to word its news article in such a misleading manner.
The difference in interpretation might be "minor" but the consequences would be huge, if people only get parts of the main picture.
Muchas Gracias, Señor Edward Snowden !
There is nothing to prevent trading on a stock from becoming so irrational that it goes outside of the fundamentals floor, crashing below the book value of the company, particularly in a panic. Stocks whose price drops enough to start tripping stop loss orders can easily accelerate right below that for some amount of time, with fun stuff like margin calls joining the party too. Value investing based on fundamentals can work very well. But the idea that it must bound the movement of a stock's price, which are driven by all sorts of other things, is not a riskless one. It assumes you can always wait out irrational market behavior, and that's hard to guarantee.
This is sort of off-topic for Google though, given the company's P/E ratio history. It's still pretty far from being a book value driven investment.