Editor’s note: This article was first published in October 2012, and is same-day news from 18 October 2012: Google’s third-quarter results, share prices of 755 and 681 dollars, and Facebook’s fall of about 5%. Google’s later stock splits and restructuring as Alphabet make those figures look very different today.
Google has just suffered one of the biggest stock market corrections in its history (-9%), going from 755 dollars to 681 in less than four minutes. The SEC (the US market regulator) was forced to suspend trading in the company’s shares to prevent further damage.
Google had planned to publish its quarterly results today after the market closed, but everything suggests that the SEC itself published the results early by mistake. They were not what had been expected: they showed that Google’s profit fell 20% this quarter and came in 15% below the market consensus.
Google has blamed the printing firm RR Donnelley for releasing the accounts early and without authorization. You could say that in four minutes Google lost 15 billion dollars, the value of that 9%.
The release doesn’t only affect Google’s share price. Fear of a new tech bubble is increasingly on investors’ minds, so after Google’s results came out, Facebook also started to fall, by about 5%.
Over the next few days, the market could keep punishing Google, although investors may have overreacted, given the heavy investments the company has made this year and its aim of diversifying its products and services.
Many people say mobile is killing the internet. That isn’t true, but it is true that internet use on mobile phones is making it considerably harder for the big tech companies to earn advertising revenue.
Our colleague Victoria Bernal says that if the punishment is severe, those who didn’t get the chance to buy the company’s shares at a reasonable price may now be able to do so, because Google will keep putting up a fight for many years and, sooner rather than later, will surprise the market again, this time positively.
Featured image: Håkan Dahlström, CC BY 2.0, via Flickr.
