Twitter’s stock dropped $8bn in a single day, all thanks to a tweet.
Investors were rattled by the early disclosure of unexpectedly low revenues, exposed before the close of trading by Selerity, a service that scours the web looking for investment information.
“We inadvertently released an early version of [Twitter’s] earnings,” Nasdaq admitted to the BBC. “We are investigating the root cause.”
Normally, the results would be posted after the close of trading to allow for the news to be digested. But the results had been posted—through not yet officially publicized—on an investor relations page
operated by the stock exchange.
“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,” said Twitter executive Krista Bessinger. “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.
Selerity was quick to disclose the source to douse early suspicions of a hack or insider shenanigans.
The poor financial results, far short of expectations, gave Twitter its second-worst trading day since it went public in 2013, reported the Wall Street Journal. By the end of the day, the stock price was about $40, down 6 percent.
On the floor of the New York Stock Exchange, traders started getting a range of where the stock should open based off of buy and sell orders that were coming in while the stock was halted, said Jonathan Corpina, senior managing partner at brokerage firm Meridian Equity Partners.
“There was a lot of noise and energy,” Corpina said. “Everyone was yelling out their buy and sell orders. Everyone was asking for price indications.”
Trading resumed at 3:47 p.m. ET with the stock at $40.45. Shares closed down 18% to $42.27, the second lowest drop in the company’s short history as a public company.
Twitter is the second big tech firm to be nailed by Selerity’s algorithmic newsgathering: in 2011, Microsoft posted results early to a public but unlinked web-page that was quickly exposed by the startup.
The New York Times’s Vindu Goel writes that Twitter is particularly vulnerable, because revenues were considered the company’s “one bright spot” amid intense competition and other bad news.