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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.
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
They have to halt trading to prevent automated trading programs from selling it down to zero.
Once there's a fast enough and large enough movement, you start getting more selling from automatic stop-loss orders, automatic short selling, and all kinds of nasty things.
The idea of a trading halt is to prevent computer programs from destroying the economy in milliseconds. Garbage in, garbage out, you know.
perhaps they shouldn't be allowed to trade.
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
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.
I'm the American who submitted it. Born and raised, lightly educated by comparison.
I realize how flawed the BBC is as a British Commonwealth Corporation, in your eyes.
I found the summary contained the most timely and pertinent information in a concise blob...
of any major media reporting body that was running the story at the time.
I could give two shits about 'finalise' v 'finalize', potato/potahto or other musket v. rifle instances.
It took roughly 15 or 20 for Timothy to massage the href and post it up.
The trading resumed 8 minutes ago.
Time was of the fucking essence, in a sense.
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?
In this case Google requested that the Nasdaq halt trading for a "news-pending" reason. The general theory behind allowing a company to halt it's own stock is so to give time for investors to evalute potentially material financial information (or in this case accidential financial information).
There is also a regulatory pause (called a circuit-breaker) if a stock moves more than 10% in five minute window. The primary reason for this type of halt trading is that there is a large imbalance between buyers and sellers (much larger than the market makers can absorb). In these types of situations, it is essentially impossible to fairly price (and thus report) a stock trade which can cause the instability in automated trading programs that you are referring to.
I believe that the erroneous report was released @12:30EDT and by the time GOOG was halted @12:50, it was only down about 9%, and it resumed trading @3:20 and finished only about 8% down. I don't think that was enough to trigger an automatic circuit-breaker. The stock was halted because GOOG requested it (when it realized what had happened).
As long as they spell it with a zed and not with a zee all is not lost.
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! --