Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Twitter Earnings Leak Fiasco: A Payday for Wall Street's Relentless Data Pursuit

Companies / Corporate Earnings May 07, 2015 - 10:51 AM GMT

By: EconMatters

Companies

Twitter's had a very bad week when its stock tanked ~ 27% in 5 trading days.  It all started when its weak 1Q earnings was posted early by Nasdaq on Twitter's IR web page.  Twitter originally planned to release earnings after market close on Tuesday (so investors may have time to digest the not-so-impressive 1Q numbers to perhaps arrive at a more rational course of action).



Press-release earnings after market-close followed by earnings call the next morning is a popular standard operational procedure of Investor Relations (IR) at many publicly traded companies.  Twitter's best laid plan was totally destroyed first by the big Nasdaq goof posting earnings about 2 hours before market-close, then by Selerity, a little-know cyber data sleuth that found and twitted Twitter's disappointing 1Q results to the whole world.  Investors jumped on the early 'leaked' info and rushed for the exit.  Twitter had to halt trading briefly and wound up officially releasing the earnings shortly before the closing bell. The stock continued to drift lower and closed at $37.84 on Friday, down more than 27%  or $14 for the week.

Chart Source: Business Insider, May 1, 2015


Fox Business reported that Nasdaq (NDAQ) has confirmed that its Shareholder.com unit was responsible for the Twitter (TWTR) earnings leak by publishing the 1Q results before the close of trading Tuesday.
“At 3:07pm, Shareholder.com inadvertently made an early version of Twitter’s earnings release publicly accessible. We are investigating the root cause. It did not impact any other Shareholder.com clients,” said Joe Christinat, a Nasdaq spokesperson. 
Our understanding is that part of the service offered by Shareholder.com is managing the entire content of the IR section of company's web site including press release, SEC filings, etc.  A lot of Nadsaq-listed companies outsource the IR content management to Shareholder.com.  Business Insider quoted one trader saying
"They [Twitter] post the report but think if they don't have a link to it on the website, no one can see it." 
That statement was later confirmed by Mashable that what Selerity does is monitor the web pages of public companies for changes that might be public, but not necessarily indexed, and that Selerity has done this before with Microsoft and ADP.  So it looks like it was human error, poor data security, and a loose Twitter ship leading to probably one of the worst IR nightmares -- weak results dramatized (or traumatized) by the early leak.


The Deeper Issue

The deeper issue, however, is that the incident highlights the relentless pursuit of data/info by Wall Street to gain any trading edge.  The fact that companies like Selerity (there's got to be 'competitors'), even exist (with clients) just proves there's huge demand to justify the resource and capital to develop this kind of technology and service in the first place. But this is actually something smaller players do, the real big players use other means such as Co-location (which costs a boatload of money) to just gain milliseconds of advantage to front run the market.

What Selerity did of course is totally legal and Twitter has only itself to blame.  Our observation is that Twitter stock started selling off even before Selerity leaked the earnings (albeit on a smaller scale than the landslide after the leak).  The leak by Selerity triggering selloff by the wider market most likely only enhanced these early positions.


So the question is who else knew Twitter 1Q performance was not up to par before the info went public? 


The scary thing is this is just one example that made the big headline due to Twitter's social media icon status.  The fact is that DOJ, SEC and CFTC have no idea or simply choose to ignore the various market manipulations going on day in and day out.  Going after a few small-fry traders like Navinder Singh Sarao is a mere gesture to justify their 6-figure tax-payers-funded paychecks.

Bag Holders

In the aftermath, it looks like the only winners coming out of this fiasco are (1) Selerity who gained some street cred and probably picked up a few new clients along the way, and (2) The big players who acted before the rest of the market mass rushed in.

Business Insider reported that one options trader estimates "the money made from those that sold calls and bought puts in response to the leak made roughly $80M."  Twitter co-founders have amassed huge fortune during the IPO and the later tech hype and stock run-up despite this recent vertical drop.  Who's left holding the bag? The typical buy-and-hold retail investors who jumped in to catch the 'high growth prospect' at the near-peak of a tech bubble.              

By EconMatters

http://www.econmatters.com/

The theory of quantum mechanics and Einstein’s theory of relativity (E=mc2) have taught us that matter (yin) and energy (yang) are inter-related and interdependent. This interconnectness of all things is the essense of the concept “yin-yang”, and Einstein’s fundamental equation: matter equals energy. The same theories may be applied to equities and commodity markets.

All things within the markets and macro-economy undergo constant change and transformation, and everything is interconnected. That’s why here at Economic Forecasts & Opinions, we focus on identifying the fundamental theories of cause and effect in the markets to help you achieve a great continuum of portfolio yin-yang equilibrium.

That's why, with a team of analysts, we at EconMatters focus on identifying the fundamental theories of cause and effect in the financial markets that matters to your portfolio.

© 2014 Copyright EconMatters - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

EconMatters Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in