How One Tweet Wiped $8bn Off Twitter's Value

An anonymous reader writes: Someone mistakenly published earnings information on a Nasdaq-run investor relations page for Twitter before the company officially released the news and it sent the stock into a tailspin. Initially the earnings statement went unnoticed, but soon a Tweet with the results got a lot of attention. The stock lost more than $8 billion at one point as news spread. "We asked the New York Stock Exchange to halt trading once we discovered our Q1 numbers were out, and we published our results as soon as possible thereafter," said Twitter's senior director for investor relations, Krista Bessinger. "Selerity, who provided the initial tweets with our results, informed us that earnings release was available on our Investor Relations site before the close of market. Nasdaq hosts and manages our IR website, and we explicitly instructed them not to release our results until after the market close and only upon our specific instructions, which is consistent with prior quarters. We are continuing to investigate with them exactly what occurred."

Comments

The real question here

[Anonymous Coward]

How is something as useless and stupid as Twitter be worth more than $8bn in the first place?

Re:The real question here

[qeveren]

Value is entirely based on perception.

Re: The real question here

[Anonymous Coward]

Thank you. This shows the insanity of the stock market perfectly. How can it be allowed when online gambling is not?

Re:The real question here

[MobileTatsu-NJG]

How is something as useless and stupid as Twitter be worth more than $8bn in the first place?

Maybe it's not as stupid as useless as you think. Why wouldn't real-time stats on what people on the internet are talking about be worth some major buckage?

Re:The real question here

[pushing-robot]

Twitter is RSS feeds, centralized and simplified. It works well for a lot of people.

If it's stupid and it works, it's not stupid.

Re:The real question here

[msauve]

That's only correct if you believe that the $120K house he mentions now costs $350K because of lower interest rates. I submit that is not the case. House prices may rise with lower interest rates and increased affordability, but not nearly that much. The example buyer is getting much more for their monthly payment with lower interest rates.

Re:The real question here

[drinkypoo]

Home prices are high because banks refuse to sell them. They'd rather they rot, become inhabited by squatters, get stripped of their fixtures, and finally burned down by someone in the neighborhood who feels that a smoking crater would be more valuable to it than a crack house.

Twisted perception

[Taco Cowboy]

Value is entirely based on perception

... which is often biased and/or twisted

Re:Twisted perception

[MrBigInThePants]

All currencies are Fiat.

Just because you back one thing of perceived value with another thing of perceived value does not make it less than arbitrary.
Although I will agree backing it with gold makes it "less arbitrary" it is still arbitrary. Not that this is possible anyway since moving a large economy to this would cause a disaster scenario in the price of gold and there is not enough gold for this anyway.

I hate twitter

[Karmashock]

Or I hate how people use it. It is a good service to share little nuggets of information amongst a lot of people. But it is often used to express political views or talk about current events and you can't make a rational contribution on complex issues with that character limit.

Both twitter and facebook can go to hell.

Not properly dishonest

[Quixadhal]

You know, the fact that companies are expected to release their earnings numbers AFTER the market closes just smacks of how stupid the entire market system has become these days. In years gone by, such behavior would have been considered shady, as it's basically concealing the numbers until people can't take action upon them.

Sure, you can argue how it protects the market from knee-jerk reactions and panic... but do you want a free enterprise system or not? Freedom includes the ability to do stupid and impulsive things. Investing in the market should be risky, as it should only be done with "extra" money anyways. Too many people want the market to be a higher-return savings account to put their retirement and life's savings into.

Re:It wasn't the tweet

[swb]

The idea that releasing the Q1 earnings after-hours allows people to make better judgments -

What you mean is that releasing the earnings after hours allows all the big guys to dump shares first, minimizing their losses, and everyone else wondering if they should eat the now-massive losses on what they hold or just keep holding and hope it goes up again.

Re:It wasn't the tweet

[AuMatar]

Its a good value to pick up if you have some long term faith in the company. But any company where the CEO is making 70 million to lose money sounds way too much like the management is running it for their own benefit to me. I won't be buying.