Social Media Company's Shares Drop after Earning Report's Premature Release (with Clearfield Comment)

A recent CNBC article reported that shares of the social media company Twitter closed 18 percent lower after the company's unfavorable quarterly report was disclosed inadvertently during trading.

Twitter's quarterly report, which was supposed to be published after the stock market closed on April 28, 2015, was obtained early and posted by the financial analytics firm Selerity. Selerity's posting sent Twitter shares plunging by almost 20 percent. Trading stopped briefly to allow Twitter to disseminate its results, which only steepened the drop. About 25 minutes after Selerity's posting, Twitter issued a press release confirming the figures.

According to CNBC, the New York Stock Exchange is reviewing the trades made after the posting.

Clearfield Comment: The premature release of Twitter's earnings appears to be a technical glitch, though it bears a resemblance to the 2013 hacking of the @AP's twitter account. The causes of both events involve the complexity and speed of information dissemination in today's markets. In the @AP hacking case, organizational complexity resulted in security holes that the hackers exploited. In this case, another kind of complexity resulted in an error that was otherwise preventable: Twitter's unintentional disclosure of its earnings on its own investor relations site. Selerity, the firm that published the earnings figures (ironically, by tweet) discovered such announcements in the past by guessing the web addresses of as-yet unpublished earnings announcements.

See: CNBC Article, "Twitter closes 18% Lower on Disappointing Report."See also: System Logic Article: "A Hacker's Market II: Twitter's Revenge," by Chris Clearfield.