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July 31, 2006 | Comments: (0)

Glitch sends Google stock tumbling

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The Nasdaq is looking into an incident that sent Google's stock plummeting by $350 a share last week, The New York Sun reported Monday.

The report said:

The incident, which some Street pros contend is a blunder of major proportions by Nasdaq, surprisingly managed to escape the eyes of the financial press and was never reported even though the decline -- an astonishing drop of nearly $350 a share in a mere 10 minutes -- was the greatest ever in the history of the stock market in after-hours trading -- and undoubtedly in regular trading, as well.

Here's what happened. On Thursday, trading in Google wrapped up the day at $387.12 a share at the usual closing time of 4 p.m. A minute after the close, Google announced its second-quarter results: better than expected earnings, but decelerating revenue growth from the prior quarter.

At 4:02 p.m., in after-hours trading, Google's shares got creamed, initially tumbling to as low as $364, down more than $23 a share from its close, but then rallying back to $391, for a gain of nearly $14.

At about the $391 price point, an order originated on Instinet-ATS (a Nasdaq company) that triggered trades between 4:10 p.m. and 4:12 p.m. at a price as low as $38 (representing a drop of almost $350 a share from the close). In brief, someone from a Nasdaq member firm punched in an erroneous figure to commence a trade.

That led to a host of subsequent trading at $38, as well as at $37.81, $37.82, $37.99, $38.02, $38.03, and $38.05.

Posted by Mike Barton on July 31, 2006 03:17 PM

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