The quick reactions to posts on social media today, have increased the dynamics of a fast paced life around the world. One tweet, one post, one like, could prove to be a game changer for companies. Recently, the social media giant which brought the ‘tweet’ culture to our generation, faced the wrong end of the stick. It got burnt by its own creation so bad, that it had to briefly stop trading on the New York Stock Exchange (NYSE). A single tweet, recently made Twitter lose close to $8 billion within minutes.
A reputed financial analytics firm known as Selerity, had recently shared its study about the process, and the reaction generated by news events that are first updated or shared on Twitter. Selerity’s business is to comb the internet to read, and find any clues or signs of financial information. One of their major tools to track such early financial data even before it becomes news, is Twitter. They provide services to very high-frequency traders at stock markets, who may act fast enough to make money on that information. Recently, just before Twitter came out with its quarterly earnings results, one tweet from Selerity gave it a jolt worth billions of dollars, which resulted in the company’s shares getting devalued by approximately 25 percent.
Twitter was scheduled to release the report on its quarterly earnings on April 28, 2015 by announcing them to Wall Street. However, Selerity tweeted a quarterly earning result of Twitter at 3:08 p.m. on the same day, which was about one hour before the company made the announcement. The tweet from Selerity looked like an authentic early release of the disappointing quarterly earnings report that the company was about to announce.
According to Selerity, merely six seconds after this, Twitter’s shares completely nose-dived. The company’s trading had to be halted by the NYSE for a short duration, while the top executives went into damage control. The company’s stock prices had got devalued due to large-scale selling by 4 p.m., when the markets closed. This serves as a reminder to everyone about how fast information can spread through internet and social media. A single tweet costing Twitter $8 billion within minutes after the information got published on the internet, shows what it can mean for the companies.
Selerity is a New York based company which was founded in 2008, and employs close to 35 people. Ryan Terpstra, Founder and CEO of Selerity, said that companies need to be on their toes after the social media revolution. He said that businesses which deal in breaking news have to be looking out for such clues and events. He clarified that his company tracked an updated link on Twitter’s own web page about investor relations. Their technology then helped them gain access to more information by following the link to a document which was posted openly on the internet. Selerity had later tweeted that there was no hacking or leak of information involved. Twitter chose not to reveal how Selerity had gained access to the information. However, in the company’s earnings report, it said that the information on Twitter’s investor relations web page was managed by Nasdaq.
Selerity is just one of a long list of companies which work on finding interesting information by combing through the continuously flowing data on social media. Another company named as Dataminr, also a startup in New York, sells its findings and insights to bankers and financial traders by combing data on Twitter. Selerity had earlier published the earnings of Microsoft about two hours ahead of schedule in 2011. This time, its single tweet apparently made Twitter lose around $8 billion within minutes. Before this, Bloomberg News, which runs a very large financial information service network, had actually found and distributed the quarterly results of NetApp and Disney much before their official release in 2010.
By Ankur Sinha
Time: This Tweet Just Made Twitter’s Stock Crash Hard
BBC: How one tweet wiped $8bn off Twitter’s value
The Times Of India: How a tweet pulled Twitter’s shares down by 20%
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