The world’s stock markets rely on internet-connected computers and networks for nearly every buy and sell transaction. If one of these networks ceased to function properly, it could cause chaos and have an impact on stock prices.
That’s precisely what happened this past Monday. Data from the Nasdaq exchange suddenly and improperly listed major tech stocks at $123.47. Such a listing sent some stocks soaring in prices, while other stocks fell to catastrophic new lows. Investors collectively panicked as they saw major companies like Apple ($AAPL) and Amazon ($AMZN) lose months and years of gains in just a few seconds.
In retrospect, the sudden change in valuation stemmed from a data error from Nasdaq, later clarified as a glitch caused by “improper use of test data.” The glitch, which took place after normal trading hours, only affected data sent out to analysts and information providers like StockTwits and Yahoo Finance. Investing brokers and brokerages where these stocks where bought and sold were not impacted, and listed the actual prices for these stocks. Regardless, this single glitch still brought upon some rather alarming and slightly comedic effects.
Amazon, currently priced at 953.66, “fell” by 87.24% due to the glitch. This wasn’t the actual price of the stock, which recently broke the $1000 mark in the last couple of weeks. Yet for investors owning many shares in the online retailer, the appearance of an 87.24% loss in value likely triggered panic across the markets.
The glitch also impacted the most popular Nasdaq index fund, $QQQ. The fund was priced 10.29% lower thanks to the glitch price of 123.47. If the $QQQ and the Nasdaq-100 index did actually fall by 10.29% in a single day, it would cause massive sell-offs and have a catastrophic effect on the global stock market. Capitalism is still alive and well, and thankfully this was just a small cosmetic error.
Zynga ($ZNGA) investors received possibly the greatest shock of all as their stock appeared to rise by $119.83, or a whopping 3292.03%. The glitch also put the troubled mobile game developer on par with Activision ($ATVI), one of the best-performing game stocks on the market. Now that the glitch is gone, Zynga’s prices are back to normal, but it’s hard not to imagine the investor who dreamed big when he saw these numbers.
The Nasdaq glitch has since been dealt with, and all subscribing services have the correct price for each stock. The exchange will likely put in safeguards to prevent such a glitch from happening again, as it could have short- and long-term effects on real prices if the markets were actually open. Yet with the world’s markets running on computers and networked devices, a similar error could always rear its ugly head.