Google News snafu leads to airline stock plunge
After an investor news wire service mistakenly highlights a 6-year-old news story (allegedly sans time stamp) about United Airlines filing for bankruptcy, shares of the carrier tank.
What was the unlikely culprit behind a 75 percent drop in United Airlines' stock on Monday? An erroneous Google News search, that's what.
The problem was that an investor news service, the South Florida-based Income Securities Advisors, found a Chicago Tribune article from 2002 via Google News and consequently included it in that day's news digest--which wound up on Bloomberg's news wire. The content of the story wasn't the sort you want to be publishing if it isn't true: that United Airlines had filed for bankruptcy. Considering the state of the airline industry today, it was by no means unbelievable, especially considering that United only emerged from bankruptcy in 2006.
By the time United put out a release denying the news, its stock had plummeted 75 percent from $12.30 on Friday to less than $3. It eventually climbed back up to $10.49; Chicago Tribune parent company Tribune Co. pulled the 6-year-old story from its online archives to avoid further confusion. But Nasdaq, which lists United Airline's stock (UAL), decided against rescinding trades that had happened as a result of the mishap.
Income Securities Advisors later said the story had turned up in a bankruptcy-related Google News search, with no time stamp attached. But different accounts of how it exactly happened upon the story don't fully add up.
The Tribune Co. effectively blamed Google's automated news search process, where headlines are filtered by bots and algorithms rather than by humans. The Chicago Tribune reported Tuesday that the six-year-old story "prominently popped up" in a news search, a position usually reserved for very recent news. The reason for its prominence, Google later explained, was that it had wound up on a list of most-read stories on the Web site of the Orlando Sun-Sentinel, another Tribune Co. newspaper. Increased traffic to the story, Google said, set off the bot--as did the fact that the day of the week that the original story was published was a Monday and hence lined up.
Bloomberg has admitted that it doesn't verify the accuracy of the news that comes over its financial data service through third-party partners. But, the Chicago Tribune reported after the fact, there's no evidence of malicious stock manipulation in this case.
Considering the lightning-speed nature of news on the Web, investors have had the occasional sobering reminder that online media isn't always accurate. Last year, a hoax memo published to a blog convinced many a securities professional that there would be delays in the release of the original iPhone, sending Apple's stock tumbling and leading to occasional whispers that someone may have been trying to manipulate the stock price. But the United Airlines situation is unique in that there was no hoax involved--the Tribune story was a real one, albeit old, and nobody appears to have been pulling a prank.
Late last month, Bloombergover the wire momentarily; luckily, it was pulled before incorrect reports of the Apple CEO's demise could have any effect on company stock.
This post was updated to clarify Income Security Advisors' relationship to Bloomberg, and expanded at 7:41 a.m. PT.