The $4,000,000,000 Post

Again, that number is FOUR BILLION DOLLARS. That’s the net dollar value in Apple stock sell-offs triggered by one erroneous post on gadget weblog Engadget at 11:49 AM EST today. The chart on the left (pirated from CNET’s report on the matter) graphs the status of Apple stock throughout the trading day – clearly there is a correlation with the post.

I’m no finance expert, but this equates to around $3/share or 2.2% of the stock’s total value from what I’m reading – aka major, MAJOR amounts of cash lost. Check out the comment section on the post-itself for some claims on individual losses.

The larger point illustrated here is that blogs are more far-reaching and influential than most people can possibly imagine. I admire and respect sites like Engadget and Gizmodo because they have really pushed tech-blogging to the forefront of relevance. Their hook is that they post news within minutes of it breaking anywhere. The technology-obsessed have been flocking to these sites (guilty) for a few years now because they have legitimate sources that provide them with timely insider information critical to maintaining the readership that craves the latest news in the quickest timeframe.

This time, however, it appears to have backfired on Engadget. Apparently they were forwarded the below memo (presumably from a trustworthy informer inside Apple) that looked to be from Apple’s internal email update source:

From: Bullet News
Date: May 16, 2007 9:09 AM CDT
To: [redacted]
Subject: Mac OS X Leopard and iPhone Delayed

Mac OS X Leopard Delayed Until January
iPhone Delayed Until October

REGIONS: Asia-Pacific, Canada, Europe, Japan, Latin America, United States
GROUPS: AppleCare, Retail

Apple issued a press release today announcing that iPhone which was scheduled to ship in June, has been moved to October and the release date for Mac OS X Leopard has been moved to January next year. A beta version of Mac OS X Leopard will be given to developers at the Worldwide Developers Conference (WWDC).

In fact, they maintain that it was distributed internally at Apple, the verification of which being what prompted them to post without further validation from alternate sources. Sources from Apple have confirmed it to be a hoax and assured the public that both the iPhone and Leopard releases are still on-time.

So what does this mean? SEC investigation? Someone surely made some serious cash if they bought at the right now. Apple’s stock almost made a full recovery once the story was identified as bogus. A mole at Apple trying to bring it down from the inside? A clever internal tactic to expose a leak backfired on the notoriously tight-lipped Apple empire?

Who knows. What is truly astounding here – yet perfectly logical – is that hordes of investors and Wall Street mavens utilize sites like Engadget to gain timing advantages that seem miniscule but can equate to millions of dollars if they get a 30 second jump on everyone else as a result. That masses of people took the post at face value and sold instantly is a testament to the success of Engadget at establishing credibility.

But now…all sorts of questions about journalistic ethics and responsibility can be raised here. Justifiably so, but these are still blogs. This is not the New York Times, nor do they pretend to be. Engadget’s bread and butter is getting the story first. At what point do a bunch of tech-nerds who started an informational website for other tech-nerds need to adhere to the same stringent code of ethics that top-tier journalists do?

Call it growing pains for the blogosphere. This ain’t just cell-phones and laptops anymore. Hopefully this realization of increased responsibility does not usher in the type of scrutiny that will mandate a sacrifice of the raw, guerrilla-style reporting that makes these types of blogs so unique.

In the end, for me, the takeaway is still the raw number, though. Bottom line: I’m still giddy over the fact that one click of a mouse by someone far, far removed from the stock market caused a $4 billion fluctuation on Wall Street.

We have arrived.

~ by CK on Wednesday - May 16, 2007.