United Airlines Crashes Seventy Six Percent On Bad Date
Monday, September 8th, 2008
A Chicago Tribune story from 2002 discussing United Airlines bankruptcy that year resurfaced today at the South Florida Sun-Sentinel. After inexplicably being reprinted in the Sun-Sentinel, a Tribune-owned newspaper, the out-of-date article found its way to major news wires when it was posted to Bloomberg under the title “United Airlines: Files for Ch. 11, to cut costs by 20%”.
Even with airlines dealing with tough conditions, the false news startled the market and prompted traders to send UAUA stock down as much as 76% to $3 on the bankruptcy fears. UAL stock was quickly halted by the exchange and United Airlines demanded the South Florida Sun-Sentinel issue a retraction to the six year old story, citing that the airline emerged from bankruptcy in February 2006. The stock recovered most of the losses to end the trading day lower by 11%.
While some may focus on the rapidity of information distribution and the market impact of bogus news items in such a paradigm, I am awestruck at how quickly the market was ready to butcher United Airlines stock. There is now no doubt that the struggling company is on the radar of some aggressive short-sellers.
How did it happen? That’s a question of keen interest to United, its investors, regulators, and newsrooms struggling to deal with the exponential impact lightning-fast information delivery can have for both good and, in this case, very bad.
It isn’t the first such mistake that’s punished an unsuspecting company. Just two weeks ago, Bloomberg published an obituary for Steve Jobs, Apple’s chief executive, in error. Jobs was still very much alive. Bloomberg noticed the error quickly and took the story down before it had a chance to roil Apple’s stock.
UAL wasn’t so lucky.
Source: http://www.forbes.com/business/2008/09/08/ual-tribune-bankruptcy-biz-media-cz_ja_0908ualstory2.html
