The early mistaken release of Q3 "draft numbers" (say Google) today before markets closed, has led to a major drop in their share price and a major spotlight on their image.
From the chart above, see if you can spot when the figures were released? Look like a share price tank to you? Does to me.
A drop of 10%..... but there was so much panic, the shares were suspended from trading. In fact it was mayhem and has now made the news internationally causing all investors to consider will the share tank further? Likely now boys.
Total Quarter revenues were 11.3 billion usd giving earnings of 2.18 billion usd. Most of us would be well pleased. All of us in fact.
The problem was, they were below expectations of 11.9 billion and 2.5 billion and expectations are already "built in" to the share price (the price of shares reflects the future potential of the company, not the current). So when expectations aren't met, shares fall - unless some major explanation is given.
In this case, the unexpected release of numbers meant no explanation was available or ready, hence the mayhem.
Click rates on search ads were down too, by 15% and this is very much core business with one major investor called "shocking". It's now built up into a story that most searches are taking place on mobile using Apps, not Google, further enhancing the fear that Google is losing steam. The reality is, that it's probably because of competition from the likes of Facebook.
Costs rose dramatically too (up a whopping 71%!) 11.4 billion usd largely due to their May acquisition of Motorola Mobility and the 20,000 employees that went with it (nevermind the 12.5 billion in cash it paid for it). Motorola losses are huge, contributing to a bad Google picture.
So overall there's probably good explanations for all of it and with earnings of over 2 billion a quarter, that's about as good a company as you can get.
However, the publicity now, which is bringing story after story but bizarre analysis, is going to be costly. A company like Google, so much the poster-boy of this new world, when it gets bad press, it reminds us all of the 2000 bubble. Maybe the Internet isn't all it's cracked up to be? Can't you just hear it.
It's actually a headline in tonight's Irish news.
And the donkeys of Wall Street will look with glee because they get a commission on a sale just as much as a buy. Shakes up the market, brings in money. The shares have recovered slightly after hours.
So hold onto your hat.
This is going to hurt