US Company Sees Stocks Falling Due to 6-Year Old Report
The following can be described as hilarious; it is a sign of both the usefulness and danger of the Internet.
Here is what happened: United Airlines stocks fell dramatically yesterday after an investment newsletter found an article online saying the airliner had returned to bankruptcy.
Investers responded immediately: the news ‘triggered a massive sell-off of the carrier’s shares until trading was halted. The stock reached a low of $3.’
Sadly for the newsletter but luckily for smart investers, the news was six years old. It appeared in the Chicago Tribune in 2002, when United filed for bankruptcy.
Once trading resumed the stock of United Airlines closed at $10.92. On Friday, shares ended the day at $12.30.
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I doubt people loosing earnings due to the mistake would be considered hilarious to many. It still finished what 12% down. At minimum the parties concerned will probably be liable to a civil suit.
Interested; as I understand it, the investers newsletter republished the entire article. It was up to readers to find out more about it, which would have shown them, within a matter of minutes researching, that the article was six years old.
Of course the newsletter should be punished; not by going to court, but by not reading it any longer. But investers have responsibilities themselves as well. Instead of remaining calm, and doing research, they went crazy.
You also need to understand market dynamics. If there’s a sell off than it’ll spiral down – no matter if the people at the bottom did read and understand or not. Once it goes – it’s going and it did.I’d expect and hope and encourage a liability suit.