clock menu more-arrow no yes

Filed under:

False tweet sent a company's stock plummeting more than 25 percent

New, 43 comments
NASDAQ times square (STOCK)
NASDAQ times square (STOCK)

Stock traders have recently had to deal with high-speed, stock-swapping computers, rogue computers sending prices haywire, and even a rumor that Hurricane Sandy flooded the New York Stock Exchange, and today some hoax tweets temporarily send one company's stock tumbling. According to Reuters, the stock price of Audience Inc. dropped more than 25 percent this afternoon, thanks to some tweets that appeared to come from stock-trading firm Muddy Waters. The offending tweet said that Audience was being investigated on Department of Justice fraud charges, and the shares fell from about $12 to a low of $8.87 in a matter of minutes.

However, traders quickly realized that the Twitter handle the tweet came from had only 11 followers. The actual Muddy Waters Twitter handle, on the other hand, has over 7,500 followers — the company quickly tweeted that "There is NO report. This is a hoax. MW does not know this company." Fortunately for Audience, the stock quickly rebounded after trading was halted just a few minutes after the stock began to drop. In the two-minute period where the stock price plummeted, some 300,000 share changed hands, about half of the day's volume. While this isn't the first time we've heard of stock pricing being affected by false tweets, Twitter's ubiquity means this kind of problem could likely become more and more commonplace.