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One Tweet Cost Twitter $8 Billion

posted by CoolHand on Thursday April 30 2015, @06:58AM   Printer-friendly
from the at-least-someone-tweets-something-that-matters dept.

GlennC writes:

Twitter was due to announce its earnings for the first quarter of the year after close of trading on the New York Stock Exchange, where the company is listed.

Except it turns out that somebody thought it would be a good idea to release this information early, on the technology-led NASDAQ run Investor Relations page for Twitter.

Initially it seemed no one really noticed the error, until a well-placed tweet highlighted the mistake and revealed Twitter's disappointing results.

http://www.bbc.com/news/technology-32511932

At one point in the final hours of trading, the stock had lost more than $8 BILLION.

 
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  • (Score: 1) by Rickter on Thursday April 30 2015, @11:28AM

    by Rickter (842) on Thursday April 30 2015, @11:28AM (#177037)

    Ideally, the price of a stock would be priced based on the present value of future (predicted) profits, discounted for how far in the future those profits at a rate based on the risk of that stock. And most large caps (Microsoft, Apple, Walmart, etc.) are priced this way.

    Stocks of companies that aren't profitable yet, or companies that still have significant room to grow have their prices set more by the people who are most excited by the potential of the company, even if the expectations are realistic. So, if investor A decides he's willing to pay 50 times the profit for a company, and investor B is only willing to pay 10, who do you think the current stock owner is going to sell to? Investor A who is willing to pay more, but that isn't going to make him a lot of profit when the company stops growing UNLESS the company can keep growing for two or three decades to overcome the price disadvantage. If you want to want to understand more about this, you might be interested in reading about investing and emotion (I find that Elliot wave analysts, based on Fibonacci number analysis of market prices are excellent at explaining this), v. fundamental investing, which takes a more analytical approach.