The flash crash that knocked $52 billion off Apple's market cap was hardly the first
By now anybody who reads the business pages knows that BATS Global Markets screwed up its initial public offering big time Friday by mangling trades in a bunch of stock symbols at the top of the alphabet, including Apple (AAPL) and BATS, its own stock.
Apple's shares briefly fell by more than $55 per share. BATS, which had been trading for more than $15, fell to less than 4 cents.
NASDAQ quickly erased all those trades and BATS was allowed to cancel its IPO.
The official explanation for what happened -- or at least the one BATS and the Security Exchange Commission worked out Friday -- is that software in a server covering stock symbols from A to BFZZZ went a little haywire, spitting out what are known on the Street as "false prints."
That made more sense than the original explanation -- a so-called "fat finger" trade caused by someone hitting the wrong keys. It's hard to imagine anyone hitting $542.80 -- the price that was entered for Apple -- when they meant to hit $598.23 (the price Apple was trading for) or anything like it.
But investors are understandably suspicious. For one thing, these "false prints" happen a lot more frequently than BATS' uptime record would suggest. Apple investors are still complaining about a mini-flash crash Tuesday morning when Apple suddenly dropped from just under $600 to $570. That print was erased, but a $582 trade that looked equally bogus was allowed to stand.
Why, these investors ask, do false prints and fat finger trades always happen on the downside, where they benefit hedge funds running computer-driven algorithms through high-frequency trading platforms like BATS, the largest of the independent exchanges.
In 2011, BATS accounted for more than one in 10 U.S. stock trades, processing an average of 29,000 trades per second. Against that kind of computer power, retail investors don't stand a chance.
The SEC was already talking to BATS about its role in the 2010 flash crash -- the one that temporarily erased $1 trillion in market value. Maybe now they'll take a closer look.
In the week prior to Facebook's IPO announcement, Renren's stock leapt by more than 60%, which comes as welcome relief to Joseph Chen, the social networking site's CEO. Here's how he plans to keep things rosy. By Bill PowellFeb 7, 2012 1:54 PM ET
Fortune's curated selection of the day's most newsworthy tech stories from all over the Web. Sign up to get the newsletter delivered to you every day.
* Has the tech IPO (initial public offering) window closed thanks to the extremely volatile market? (VentureBeat)
* Whether or not Spotify can achieve its ambitious goal of nabbing 50 million U.S. users during its first year of domestic operations remains to be seen, but at the very least, it MOREJP Mangalindan, Writer - Aug 9, 2011 6:30 AM ET
Both daily deal sites are thriving, but as Tim O'Shaughnessy sees it, LivingSocial outpaces Groupon where it matters most: innovation.
FORTUNE – Few areas in tech are more buzz-worthy than the daily deals space right now. Groupon, often dubbed the world's "fastest-growing company," recently filed for an IPO, while LivingSocial, which reportedly picked a team of underwriters for its own public offering, isn't far behind.
But as LivingSocial CEO Tim O'Shaugnessy sees MOREJP Mangalindan, Writer - Jul 27, 2011 2:57 PM ET
By Peter Lauria, contributor
The big banks are back to help the Valley's tech pirates turn into titans, but this time there's a chill in the air.
FORTUNE -- They're back.
After all but abandoning Silicon Valley in the wake of the first dotcom implosion, Wall Street bankers have returned to the tech Mecca en masse, in search of -- what else? -- riches to be made taking startups public.
But the moneymen of MOREJun 24, 2011 11:47 AM ET
Groupon's largest shareholder and chairman, Eric Lefkofsky, has a back story investors might want to know.
By Kevin Kelleher, contributor
FORTUNE -- "Lets start having fun... lets get funky... let's announce everything... let's be WILDLY positive in our forecasts... lets take this thing to the extreme... if we get wacked [sic] on the ride down-who gives a shit... THE TIME TO GET RADICAL IS NOW... WE HAVE NOTHING TO LOSE..."
This is a MOREJun 10, 2011 5:00 AM ET
By Kevin Kelleher, contributor
Troubling financials and an offering letter full of mixed messages should make investors wary about buying into Groupon's IPO.
FORTUNE --- Dear Potential Groupon Shareholder,
I'm writing this letter to provide some insight into the Groupon IPO that was omitted from the cheery, twee "Letter from Andrew D. Mason" that prefaced the prospectus filed by the group-buying startup.
You get the feeling that the original draft of Mason's letter was MOREJun 6, 2011 11:35 AM ET
Fortune's curated selection of the weekend's most newsworthy tech stories from all over the Web. Sign up to get the newsletter delivered to you every day.*
* With 7,000 employees and a recently-filed initial public offering (IPO), Groupon is one of the fastest growing companies in tech right now, but it's business model remains a mystery to most. Here's a primer, and for further reading, check out two opposing critical view points that have emerged MOREJP Mangalindan, Writer - Jun 6, 2011 6:30 AM ET
By Bill Powell, senior writer
Investors are pitching the Zuckerberg-Gates-Google model of college-kid startups at China's prestigious universities. And the kids are into it.
FORTUNE -- IPOs from Chinese tech companies -- in e-commerce, social media, mobile applications for tablets and smart phones -- in just about anything in the so-called TMT (technology,media, telecom) universe have been coming with such relentless frequency that they're hard to keep track of, especially from afar. So MOREJun 2, 2011 12:51 PM ET
By Kevin Kelleher, contributor
The hot stocks of the 80s and 90s have morphed into value investments while Facebook and LinkedIn get all the buzz. Is the market pricing in uncool?
FORTUNE -- Have technology investors lost their bearings? In a month when Facebook, having made $2 billion last year, is valued near $100 billion; when social-network LinkedIn (LNKD) starts trading at 17 times its revenue and RenRen, the Facebook of China, lists MOREMay 26, 2011 12:27 PM ET
|ID'ing alleged Bitcoin creator leads to L.A. car chase|
|Russia already paying price for Ukraine|
|Wal-Mart slashes iPhone prices|
|Albertsons to merge with Safeway|
|China has first corporate bond default by solar firm|