Friday, October 25, 2013

Materially Mistweeted? Tale of the Ticker Symbol

My coworkers informed of a fascinating story of how one letter and an overactive stock rumour mill can provide us a valuable lesson in defining materiality in the world of a 140 character "tweet". As described in this post on Tech Crunch, the stock, "TWTRQ", went from less than a penny to a high of $0.15, which works out to - I am relying on TechCrunch on the math on this one - to be a rise of 1,400%. Wow! Was it the birth of new valuation model that made Wall Street realize the value of TWTRQ? Did the Federal Reserve grant TWTRQ, or  Tweeter Home Entertainment Group, the right to print money out of thin air (as they do with other banks)?

Looks like the free market fundamentalist really got it handed to them on this :) 

Apparently, the collective "wisdom" of the markets that drove investors into a feeding frenzy over TWTRQ. The reason? Well, investors apparently bought the stock of this company, which has been bankrupt since 2007, thinking it was the initial public offering of Twitter (symbol: TWTR). Who would have thought to assess the materiality of a ticker symbol? Could the investors sue the auditors on this one? Now that would be a court case worth watching.  

Of course on a more serious note, it really illustrates how little people do when investing their money in stocks. We are not talking about running the latest financial model pulling XBRL tagged information in real time to determine the value of the company. We're talking about checking financial news sites to see when the stock was released. 

And to finish a lighter a note, we can at least chuckle at's take on this

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