However, false information disseminated on Twitter doesn’t always have a significant impact on markets. On Sept. 9, 2011, after Web show What’s Trendinginaccurately reported on Twitter that Apple founder Steve Jobs had died, Apple (AAPL) shares fell only 1 percent and quickly rebounded after the program issued a correction (CBS (CBS) ended its relationship with the show shortly afterward.)
Similarly, Twitter account @Greenlightcap, claiming to be prominent short-seller David Einhorn, tried to induce fluctuations in Herbalife’s (HLF) stock by sending a tweet suggesting that Einhorn was picking sides in the ongoing spat between investors Carl Icahn and Bill Ackman over the company. The tweet read: “The $HLF tug of war will in the end come down to who has more money to play with. I wouldn’t want to be in Bill’s shoes right now #TeamIcahn. There was no noticeable change in Herbalife’s stock, and CNBC’s Herb Greenberg quicklyconfirmed that @Greenlightcap was not Einhorn.
With the SEC and FBI investigating the AP hack and Twitter beefing up its password security protocols, major incidents such as the Twitter crash may become rare. But as long as individuals continue to trade based on insights gleaned from social media, the potential for a single tweet to shift markets remains.
