An erroneous Twitter feed caused Audience Inc.’s (NASDAQ: ADNC) stock to lose 25% of its value in a matter of minutes. The message seemed to come from the stock-trading firm, Muddy Waters, but was quickly proved otherwise.
Twitter, which is a highly popular social media site, can often times cause a lot of problems when rumors, real or imagined, get passed on. It is also not uncommon for people to pose as an official spokesperson, celebrity or company simply for starting false rumors that often spread like a zombie virus. This recently happened with Audience Incorporated (NASDAQ; ADNC).
On January 29, 2013 stock value for Audience Inc. plummeted when someone posing as the investment firm, Muddy Waters, said that the U.S. Department of Justice was investigating Audience Inc. over some kind of fraud. Soon following the post their stock value dropped like a rock from a high of $12 to $8.87.
Dropping around 25%, Audience Inc.’s investors went into an instant panic. Luckily the original twitter feed was discovered to be a fake with a total following of only 11 people. Soon after the discovery the stock was able to rebound.
Some experts have speculated that the false twitter feed may have been created to make the value drop for a quick profit once it rebound. There has been no definitive proof of the stock manipulation for Audience Inc. other than the one erroneous Twitter feed.
Twitter has often been scrutinized as a highly unreliable source of intelligence. During Hurricane Sandy of 2012 there were many so-called official twitter feeds stating that the stock market was completely destroyed by floodwaters. In regards to this more recent event with Audience Inc., the stock drop lasted a mere 2 minutes with over 300,000 shares exchanging hands, or about one half of the day's total volume.