Slashdot Mirror
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."
people realized although such was the value on paper, no one could actually sell at that price and receive anything near the current "market value".
I keep telling people we need our high-interest-rate market back because it'll force home prices down. Home prices go up when interest rates go down, because people are still buying the same houses for $1200/mo; the difference is whether it's a $120k house or a $350k house that you're paying $450k for. Also, with high interest rates, putting an extra $20 on your mortgage cuts off tens of thousands of dollars from the total cost; with low interest rates, you need to take heroic efforts, like tripling your payments, to save any real money.
They tell me that people just won't be able to afford houses, and that the prices won't come back down. Houses will just go unsold, forever.
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The thing is wall street speculation is now highly automated. ... and cause a sell-off run much more efficiently than humans reading twitter ever could.
This is exactly what triggered it. The page was up for forty five seconds. 45 seconds is not enough for humans to read and understand it, but that is plenty of time for bots.
During that 45 seconds, assorted stock-trading bots picked up on it, scanned it, and sold over 3M units, or $153M, of their stock. That's over 30x their normal trading levels.
The huge uptick in stock sales triggered another bunch of automated trades, and over the next 18 minutes they had more trades than they had seen all quarter -- the last trade spike that big was after their last earnings report, when the price jumped from about $37/share to around $50/share.
Then, about 18 minutes after the brief posting, trading stopped because of the anomaly. It is normally an effective tactic when trading bots go crazy.
20 minutes later trading was resumed for the remaining half hour of the day. There were over two million trades per minute over that half hour, and the stock price continued dropping from $51.24 to $42.27, with a slow but steady drop today down to $38.49. Days like this make me laugh at stupid investors. No point in selling now, the value is already lost. It is unlikely another bombshell will be dropped. Selling just reinforces your losses.
Of course, if you're a long term investor you'll note that nothing about the company changed; no deals were cancelled and they are still growing in ways that matter. Their stock is low, making it a good value to pick up.
//TODO: Think of witty sig statement
When you buy stock you are buying a real ownership stake in a real company.
When you gamble, you aren't buying any property...you are buying a chance to roll dice.
That difference should be obvious. They are both risky, but in one you buy something in real, in the other you buy a roll of dice.