Engadget Knocks $4 billion off Apple Market Cap on Bogus iPhone email

Can anyone say sell short?

it looks like a lot of people’s automatic sell floor got hit and we went into a systematic meltdown.

That said, my automatic buy ceiling was set at $103.01

http://digg.com/apple/Engadget.....nipulation

Looks like I wasn’t the only one to think maybe someone was selling short.

Never underestimate the power of blogs.

Damn, that’s just amazing. If someone did this just to short AAPL I hope they get the book thrown at them.

This is a big day for blogs!

Emre - yeah, but not in a good way.

How would Apple have liability? They were impersonated and a victim of a hoax. If anything, Engadget posted deceptive information. How is Apple responsible for what Engadget did?

STFU Michael you just want to be the #1 blogger - dream on.

Pentau, sounds like you’re referring to Sprezzatura. But in fact what Sprezz meant was that s/he hopes WHOEVER wronged Apple (by forwarding the bogus e-mail) gets “…the book thrown at them.”

Sorry that I wasn’t clear. I was referring to the quote:
“Let the lawsuits and criminal investigations commence (although to be clear, I do not believe Engadget will have any liability here. Apple may).”

I don’t see how Apple has liability if Engadget publishes an internal memo?

Wow,

Someone dumped millions of shares within minutes. A lot of money was lost and made because of this little hoax…

This just shows how low journalism has gotten - what happened to having 2 confirmed sources before going with a story?

Every ad-dependent blog/”news” site is too eager to run with any friggin’ story without applying the most basic of professional journalism ethics.

One more thing - I think it’s lame Michael to hint that Apple may be to blame for this. Again, read my prior post about using two (2) CONFIRMED sources. Any real journalist would have picked up the phone and gotten Apple to comment prior to going with this. Engadget decided to run with it and they and the author alone deserve to be investigated.

I truly hope this FINALLY puts the fear of God into fly-by-the-seat-of-your-pants sites that hide behind the label of “journalism” without following the basics of that profession. The SEC needs to put them on notice that factual reporting is required before raking good companies through the mud, especially when it just happens to be near options expiration - another story in itself.

That has to suck

Correlation != causation.

This is sensationalist, Michael. The fake story temporarily caused the stock to dip mid-day. That’s it. Engadget didn’t “knock 4 billion” off anything, and I might add it seems like a libelous statement to make. They ran a story based on a legitimate looking email from Apple’s servers, and a follow-up retraction when the fake was made known.

First, the stock is only down .16 on the day, not $1.60. Which brings me to my second point … yeah the story was most definitely the cause for the 12pm tank in price, but you’ve no idea what other factors played on the stock the rest of the day.

To wit: Engadget’s story was posted around 11:54AM. The stock price was still at 107.89 at 11:56AM. It tanked shortly thereafter, and it closed at 107.34. So did the fake story cause it close down that far? Who knows, the stock was down to 106.84 before the story ever broke on engadget.

And yes, the person that sent the email will get caught, they’ll be in big trouble with Apple, and if the SEC investigates and finds out they were involved with short selling or buying PUTS or buying long/CALLS on the dip, then they’ll be in even bigger trouble.

Curt - question: What if Engadget received confirmation from two separate Apple employees that they had both received this internal email, with the email proof to go with it? And how do you know they didn’t?

Very interesting power, in fact… It’s kind of scary!

It actually only ended down 18 cents today though, not $1.40.

-Sam from MarketMatador.com

One final point … the only people that lost money today were day traders.

If you are invested in Apple stock, you closed down a mere 0.18 on the day. After the run-up the past few weeks, you’re not feeling too badly.

alot of ppls’ stop limit sell order were hit today, this is some crap they pulled

I agree with Curt’s (#14) comment about two sources. However, with “breaking” news every 2 seconds (or so it seems), is it even possible to fact check before someone else posts the same thing?

This also addresses a key question for companies that don’t track and respond to blogs… They can be seriously impacted quickly and to their detriment.

Oops its lots of money. Yeah its good to see that Blog is so powerful. people have started thinking that Blog give authority news. As mike says its a big day for bloggers - not a good way.

My thoughts including video:
http://www.centernetworks.com/.....ple-crisis

#20 TSW - you are incorrect I think. Many people use limit orders and this dip may have hit their limits. Both on the buy and sell side.

#22 Nathan - Just as I spoke about in my video, blogs want to be first more than they want to be right many times. I don’t know if that happened in this case but it sure does happen a lot. Being first means more traffic than being right - in some cases a LOT more traffic.

No one is taught any journalistic rules before they get their blogging license. Just throw up a shop and do whatever you like. No one seems to care when a blog is wrong. They continue to come back day after day.

It will be interesting to watch the story unfold.

This is absolutely hilarious and absolutely troublesome at the same time. There were many people that lost many dollars because of this… likely traders. In any case, I’ve always espoused a holistic view to personal finance and I speak about this example over here…

http://www.capitalai.com/blog/.....ays-sorry/

Curt is right. Engadget should have called to confirm given the gravity of the news. It would have taken all of five minutes. If Apple gets sued, expect it to implead AOL. Also, I’m more inclined to believe Apple than Engadget — I’m sure Apple reviewed its server logs prior to issuing its statement plus it’s easy to spoof email, which is probably what happened.

“No one is taught any journalistic rules before they get their blogging license. Just throw up a shop and do whatever you like. No one seems to care when a blog is wrong. They continue to come back day after day.”

Hey Allen…Journalists make a lot of mistakes which is even worse considering they are supposedly more legitimate.

I am not saying Engadget’s methods are right…just that the arguments should be more balanced.

Also bear in mind that if “investors” don’t know the realities they face daily…maybe they should not be investors (especially Day Traders) in the first place…

Very true Adrian, I was just pointing out that a person who has a driver’s license should understand the road signs better than someone who does not. But as you say, it does not always work out that way.

And I also wonder if other news or information will come out that may have also accounted for the change in stock price.

engadget is a joke. ryan is a joke. fake or not, the email stated “Apple today issued a press release…”. For God’s sake what does it take to look at a few sites for the release and then calling Apple’s PR team for confirmation.
He’s a kid who thinks its cool to be Editor in Chief. Put his name at the top of the investigation list. How many shares did HE trade in the 90 minutes it took to correct the story?

A prudent investor 1.) doesn’t make sound investment advice based solely on the missives of a gadget blog and 2.) checks confirms the press release *himself* before placing an order.

An unwise investor who buys or sells exclusively based on “news” from Engadget.com gets what they deserve.

A fund manager who makes allocation adjustments based on anything the author of a blog might say, and nothing more, probably deserves to be shot.

If we had a fatality from all of this, I’d be tempted to nominate the whole event for a Darwin Award…

As Benjamin Graham would have said: “All investors should stay on an isolated island for 20 years”.

I’m glad I play long term. It spares me from this stock market illness: speculation.

Engadget needs to be sued to death for pulling publicity stunts like this. Any blogger currently employed by Engadget that hopes for a long-lasting career in the industry needs to jump ship and get the hell out of dodge, because there will be a time when anyone remotely associated with that site will be avoided like the plague.

Apple needs to bury Engadget for affecting them like they did today. This is VERY serious, and they need to stop it.

Thats is not a good assumption. 3-4 % movement for the apple stock is pretty normal..it does not require an email hoax

Thats a great example of what changes blogs could create.

If, really, the email had originated from Apple, then Engadget is not to be blamed.

Do blogs really have that much power?

It’s amazing how much influence and power blogs have on the stock market, especially the tech sector. I’m astonished as to how much damage one tiny e-mail excerpt posted by a gadget blog can cause a company.

Well, Engadget sucks and has always sucked. Not a bit surprised here.

That’s pretty amusing. I’m not sure why people would sue endgadget (not that my opinion will stop them) it’s own fault for not doing research and for basing their investment strategy on a single unsubstantiated blog article.

http://www.60in3.com

Maybe if Apple had a more open policy regarding their blogs and dialogue with the customer, the shares wouldn’t have tanked even that little bit. I like companies that respond quickly to surges in the blogosphere. The one’s that aren’t even in conversation have a window of opportunity that is in minutes not hours to find a way to respond. Trust is built through talking, and over time. Did anyone find a way to get to Apple to ask them if it’s true? Funny that Apple had to rely on Engadget’s good will rectify it all.

This is as old in concept - even before electronic trading, there would be rumors that spread like fire through the trading fllor only to be told at 1:00 Pm that was a hoax … but the email should be easier to trace than ’some guy’s niece said …”

Engadget is retarded. Almost all the mac rumor sites reported having received the fake email as well, but did not post the story. Engadget jumped the gun and should apologize or something. But, not like they’re a credible source (besides really bad gadget photos) that anyone could trust.

I have it on “pretty good authority” that both the iPhone and Leopard are at least several months behind schedule and all you guys should definitely sell your stock ASAP.

Stop whining about Engadget. They passed along some information. It obviously didn’t check out. This whole idea that everybody should be expected to follow ‘journalistic standards’ is what causes idiotic investors to sell their shares before they know if the story checks out.

Everybody who sold their shares did so thinking they were jumping the gun and beating everybody else. They were wrong. Their mistake cost them, and this is how the market works. If any of them truly regret what they did (rather than merely being annoyed because it didn’t pan out in their favor), then perhaps they need to learn a bit more before investing with real money.

I’d also like to point out that 4 percent change is nowhere near tanking.

Stupid people go on glimps

Steve (Jobs) - 4% is tanking, when it happens in two minutes.

Amazing how volatile the stock market can be and how much of an impact Engadget has.

“If the story is indeed untrue and/or if the value of the decline in prices will prove to be below the level of the stocks value, a recovery should be on its way. However, there are a lot of people who lost money within 24 hours and some who are bound to make a killing by buying when the stock prices are at its lowest levels.

The pen is indeed mightier than the sword and those of us who wield it should do so responsibly.”

It really doesn’t make any sense. Pure non fact speculation driving down stocks? Even it were true, the iphone still exists and is still coming out, so apple will do just fine. It seems to be people who work in the stock markets are just plain dumb and stupid to sell stocks based on such nonsense. No wonder no-one can figure out how stocks rise and fall, it’s all driven by idiots on pure sill emotional reactions. You can’t figure out emotions, so stocks will always be un-predictable as human nature is.
That said if people who are bad guys realise you can drive stocks down this way with bullshit in blogs, it’s clearly a good way for bad guys to make money out of stupid investors. They already do it by sending out bullshit e-mails.

What happened to fact checking prior to posting a story? Is this not required by bloggers?

I’ve been reading lots of posts like the one quoted below. I would like to point out that those who sold their shares are the ones who made money…so perhaps people who are making such posts “need to learn a bit more before [posting opinions about] investing with real money.” Here is your bit more: “buy low, SELL high”. Got it?

“Everybody who sold their shares did so thinking they were jumping the gun and beating everybody else. They were wrong. Their mistake cost them, and this is how the market works. If any of them truly regret what they did (rather than merely being annoyed because it didn’t pan out in their favor), then perhaps they need to learn a bit more before investing with real money.”

>A lot of money was lost and made because of this little hoax…

Let’s get something straight here: nobody lost or made money the didn’t deserve to make or lose.

Here’s what happened: an irresponsible information outlet published raw input in internet time without properly evaluating it and stupid folks holding shares believed they information offered.

Suppose, for a moment, I’m a vendor who just got out of a meeting at apple where they declined to buy my product… noticing that they had open wifi that allowed their e-mail server to be used, I decided to send a little boner out to the El Engadgeto (known rumor mongers) in an effort to blow off a little steam. Next thing you know… the those shitheads publish my little nugget as gosple and the stock starts to drop. Am I a criminal master mind: no. Was there intent: not really. Are massive amounts of people with more money than sense not able to manager their investments correctly: yes. Am I Donald Rumsfeld: yes.

This is an abject lesson in the general stupidity of the average stockholder; put the blame (not that there’s much blame to begine with) where it fscking belongs.

Dude… A blog is but a blog. Nothing more.

Heck, if this was truly a response to Engadget’s post, they should be happy, and rather more careful in the future, about the reputation they’ve established and how to maintain it.

Apart from that, Brent has said it all above. I too would love to be able to nominate this for a Darwin Award.

“A prudent investor 1.) doesn’t make sound investment advice based solely on the missives of a gadget blog and 2.) checks confirms the press release *himself* before placing an order.

An unwise investor who buys or sells exclusively based on “news” from Engadget.com gets what they deserve.”

I’m with Brent, too. I’m amazed how one blog post could have such an impact on a stock.

Curt and Diego - don’t confuse blogging with journalism. They can be the same, but the vast majority are not. Nor should they be. Blogs can post whatever they want without checking anything. As a media consumer, and as an investor, you need to know the difference.

if you like apple check out AZTM they are an up and coming tech. They own http://www.searchjerk.com which got over 9 million pagewviews last month and is quickly becoming one of the top search engines on the market

What Curt said, but Engadget nor Apple should be liable. I’m glad that it happened and I hope it happens again to all them idiot crooks at the stock market reacting on rumors alone as they always do instead of triple checking their rumors with official sources instead of scheaming an effing blog and dumping stocks like the end of the world is here. Noobs!

Hello all, please replace ’scheaming’ with ‘Skimming’. Thank you!

I agree with JJ and Alex. The real loser will now be Engadget.

With Apple I’ve been long since shortly before Jobs came on board. So, I’m enjoying the ride, not even bothering to see the latest quote.

I think this is a big sign of what happens when a large number of investors in a company are “fanboys.” Apple’s halo effect extended into people investing in a company they follow because it’s doing well — nothing wrong with that. But when the investors are the same people that devour every trinket of information that comes across a blog, you see something like this.

This is something that only could have happened to APPL. This couldn’t have happened to less “publically followed” but equally valued stocks, such as a semiconductor company or somesuch.

Market makers and active traders will hit the stock regardless of the news story; any synchronized concerted action makes money; that’s why it’s illegal for traders to create such synchronisation signals. Those who plant stories like this during market hours, whether they profit from it or not, allow stock to be stolen from innocent investors by needlessly triggering their prudent stop-loss orders. Anyone actively trading at that moment can simply pick up the free money, stealing a couple of bucks for each share needlessy sold.

It was not active day traders, spooked by a silly story that lost money here, it was investors with prudent stop-loss orders in place who had money taken from them by the day traders, for whom the story was simply a starting gun.

Even if those planting or publishing the story are “innocent”, what they did was morally no better than knocking down someone emerging from the bank and laughing while bystanders help themselves to the cash they have dropped.

Why is two sources necessary for a journalist to take action, but two sources not necessary for the person selling stocks to take action.

Why aren’t the people selling stocks without doing proper research not to blame? Why isn’t it their fault for sumbitting to panic. If they’re so heavily invested with Apple as to take a hit if the news is true, why don’t the investors phone Apple and confirm the story before selling all their stock.

It’s a friggen blog post, it’s the investors fault, not the blogsite.

There is a somewhat amusing back and forth about this on Mr. Nick Denton’s valleywag, between Denton, his employees and Mr. Jason Calacanis.

yeah - Someone was shorting this stock for sure …

- *probe into endgadget

Allen — anyone who stops out of their shares on a limit is not an investor, and in my book that makes them a daytrader/gambler. I’m not knocking it, I’ve done some of it myself. But those are the risks you take as a daytrader. Investors — the core of people holding AAPL — lost nothing yesterday.

I think this also illustrates how little knowledge of the tech industry and its goings on the stock market/traders have. I think it could be fun (also probably illegal) to make up a fake component in MacBooks or something (TEO controller) and post a “story” saying Apple’s supplier of Macbook TEO controllers just had their principal factory burn down…. then watch the tech bloggers immediately jump on the fact that its fake but Apple’s stock drop anyway.

Don’t actually do that, I own shares.

2 notes:

Who bases selling stock on a “gadget blog”

&

I sale short ICQ

What a nightmare? Bloggers are getting their due.

I can’t believe they would post something like that without verifying the story. Another shining example of shoddy blog “journalism”.

Engadget is totally at fault here as they did not fact check before posting such a story. They are not a rumor sight so yes some investors will take their blog seriously. I unfortunately lost allot due to this false information, as a large holder of AAPL options my options took a 20%+ decline and are still below the pre rumor value… I hope the SEC does a full investigation into any insider trading that benefited due to the rumor…

An excellent marketing/press opportunity missed by Truemors……

Seems to me the stock sellers get what they deserve! The morons should not sell millions of dollars of stock based on an unoffical, unconfirmed email posted on a geek web site. Or even CNN for that matter. They should wait for OFFICIAL Announcement from APPLE or any company for that matter.

I am not shedding a tear for them!

This is a very telling story of the state of the blogosphere:
1. Skewed demographics toward Apple enthusiasts.
2. The goals of a blog is speed, not accuracy. That’s because speed of information is more important because it’s tied to traffic which in turn is tied to revenue.
3. The public doesn’t distinguish the difference between a story in Engadget and one in the NYTimes.

More here: http://www.sparkminute.com/?p=156

Anyone that thinks that this isn’t going to get serious attention from the SEC, Apple, Engadget, AOL and Time Warner is seriously mistaken. The best outcome for everyone is if this is simple a fanboy looking to get some attention by publishing a fake story. More likely, someone thought they could make a few bucks by taking advantage of Engadget’s weak editorial standards and ‘quick to publish’ facts to make a quick buck. People who don’t understand that more than $4B in REAL money changed hands as a result of this SCAM do not understand the capital markets. These markets are very regulated and are based on a system of trust and accurately reported facts and data. Any attempt to benefit from this activity is against the law.

I promise you that Ryan and Peter are not having a good day / week.

What’s with the drivecleaner popups when reading techcrunch via the full feed?

I’ve experienced this 3 times on different machines in work and at home, on a mac on a PC it aint spyware. Are TC forcing popup ads for RSS readers?

The price is now $108.77. For those who stuck it out, it rebounded quite nicely.

Good job on keeping up-to date with what happened to Apple’s stock value. The six minutes in which the stock dropped by four dollars must have really caused a lot of people to panic. We wonder if this incident will affect the development time of the said products.

We wrote an article on this which can be found here: http://www.qj.net/Engadget-rum...../aid/92758

Even though Engadget wasn’t even close on this bit of “news”…it is still impressive to see how many people apparently follow the site.

Nothing is going to happen to Engadget so just get it out of your little brains. This anonymous tipster will be found, and will have his ass handed to him/her.

Hi, someone is copying TechCrunch’s blog posts and putting them on their blog. Most of it is paraphrased, but there is one sentence that is copied exactly: “They based the story on an internal Apple email that was forwarded to them”.

See the following link:

http://www.johnchow.com/feel-t.....-the-blog/

Wow!

I too think Endgadget would be liable if it was anyone of the two. Apple here is more of a victim, but you never know these days with all these new laws being introduced all the time.

I wonder if this wasn’t a plan by a short seller? Or a creative day trader?

If it was, someone is probably laughing all the way to the bank!

On one hand I don’t see how they could hold endgadget responsible because they’re just passing info on. On the other hand though, they should have checked the source.

Don

Endgadget has been playing with the public for a while now, first with a ‘fake’ iphone news and now this. They should grow up and take on the responsibility of internet reporting. Also they don’t credit their sources properly, all their links point back to their own tag pages, including links to trade names etc.

The wisdom of crowds rules yet again. Wait I’ve been to wikipedia lately what wisdom?