Google Earnings Come Early; Shares Drop | Hacker News Reader

Google Earnings Come Early; Shares Drop

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As an interesting aside, I created a word cloud with the last 1000 Hacker News headlines to cross the 250-point threshold. I found Google was in 49 of those. Hacker News seems to care more about Google than any other company.

http://images.diegobasch.com/newsyc250.png

Interesting: I could not spot Facebook there easily?

I found Zuck, but no Facebook.

You say that like it's a bad thing.

Curious - are you using NetBase for this?

No, it's my own tool written in Clojure, using WordCram.

http://wordcram.org

I should probably know this one but I am having trouble placing that font. It looks beautiful. Can I get a hint?

It's called Coolvetica.

http://www.dafont.com/coolvetica.font

Thank you!

Very cool. I'm not sure that google would be thrilled about the words that ended up inside of their letters though... its like a subliminal message.

Google is kind of the Internet company, and HN runs on the Internet, so...

I don't trust this as I don't see "Stripe" in a very large font! (sort of only half joking)

No Microsoft. No Facebook. No IBM.

Very few from this list: http://en.wikipedia.org/wiki/List_of_the_largest_technology_...

Do you have the raw ranking data available?

Posts that aren't negative about Microsoft are routinely flagged off the front page.

It's more an observation that HN is highly skewed toward consumer Internet companies. And doesn't focus much on specific companies generally (Google, Apple, Twitter, and Facebook/Zuckerberg excepted).

How did you come to that conclusion? That is, how are you able to differentiate a story naturally being bumped off the front page by other stories getting more aggressive upvotes, and a story being buried by many flags?

If a story has 50 votes and was posted 5 hours ago, it should be ranked higher than any story that has less than 50 points and was posted more than 5 hours ago. If not, it shows that the story was flagged.

Example: http://i.imgur.com/IlAn2.jpg

Another example: http://i.imgur.com/fSJqq.png

Also, Paul Thurott's http://winsupersite.com is completely banned from HN, most probably due to excessively being flagged for the crime of being a Microsoft watcher news site.

I don't think the ranking algorithm is that simple - I think it takes into account recency of votes, although I'm not sure. The first example does not seem suspicious to me, although the second one is surprising to me.

The ranking algorithm is that simple. http://amix.dk/blog/post/19574

Watch articles that are critical of Apple or Google, or those are not critical of Microsoft, most of the time they get flagged down by overzealous fans.

Edit: Happening right now to this very article :)

I recall Paul saying on HN that he tweaks with HN's algorithm, and those changes are not represented in what's posted on arclanguage.org. In fact, he says it in response to that writeup: http://news.ycombinator.com/item?id=1781417 There's also the voting ring detector, which is not distributed.

Did you use a published data set or did you scrape the site?

I used the newsyc250 feed on Twitter, last 1000 tweets.

Cool - thanks

I don't really think that's true at all. Google just generates the most newsworthy headlines.

The same trend can be found on many other sites. I think TechCrunch once posted an analysis of their headlines that showed something like a 3:1 ratio of Google headlines to Apple headlines, and (at least at the time, haven't read them recently) they clearly weren't bigger fans of Google than Apple.

I think that Google is immensely influential in the current startup community, for being the best example (in the current market) of a successful, profitable startup. Furthermore, I think their corporate environment is often held as, if not a model of, then at least better than 99% of corporate environments. I'm sure some people (Michael Church is popular on HN, I think) would disagree. But the point is, everyone wants to be the next Google.

So, color me not surprised.

I love this talk of "analysts". Did the "analysts" miss that Google just bought a struggling 10B+ Motorola? Do they expect it to be some magic unicorn that can turn Motorolas losses into Googles profits in a single quarter?

Here are the analyst numbers in a bit more detail: http://finance.yahoo.com/q/ae?s=GOOG+Analyst+Estimates

38 separate analysts, high estimate was $13, low estimate was $9.92. Average was $10.65, actual numbers were $9.03, so below even the most pessimistic analyst. That usually means the publicly available info just wasn't accurate, that something happened privately that only Google knew about.

Usually companies avoid this kind of thing by giving some mid-quarter update so that they can mitigate some of the damage.

Google actually provides no EPS guidance at all though, which also caused problems with a big miss in January 2012. Analysts like to have something to work off of.

Analyst earning forecasts are known to be optimistically biased. Here's a paper discussing this: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=971027

Which should theoretically let you "put your money where your mouth is", since if analysts are systematically wrong, and the prices move in response to analysts...

I think you'd have to test the latter assumption too before you go betting against them.

Although I think most serious investors either ignore analysts or know to adjust for their biases. Some of the real victims are lazy academics, as the paper discusses.

I wonder if this is a variation of the analyst theme of never, ever give a stock a sell rating?

Sometimes I sense a lot of derision from some folks towards "analysts" on these posts. A good analyst has a lot of public data and history to go along with their own sleuthing and detecting (talking to larger customers, suppliers, partners etc) where they should arrive at good estimates. Lord knows they get paid pretty well to be good at it. So if this was the cause of the big shortfall and all the analysts missed it then it is a poor job they're doing. I just don't think we should deride analysts and or let them off the hook based on the idea that there isn't a discipline here that can be followed.

Something like 9/10 funds under perform the market as a whole, right? Analysts are almost all liars marketing themselves, I don't think they need a 'break'.

There's a lot of derision because the profession of stock analyst is about equal to Snake Oil Salesman.

What's worse is that the phrase "missed analyst expectations" is common in the media yet nobody questions what that really means anymore. It's just generally perceived to be an instant negative.

>It's just generally perceived to be an instant negative.

It's an aggregated consensus of short term future earnings best guesses. It is assumed that these expectations are "priced in" to the stocks's price. When a company releases earnings and "misses", there is an adjustment to the share price.

I think you just catalogued the definition of the bias that exists here as being based upon sweeping generalizations and ignorance: "Something like 9/10 funds under perform the market as a whole, right?" - What does that mean? That 9 out of 10 mutual funds return less than the average improvement in the Dow? That means that 9 out of 10 funds would be weighting in the bottom 50% of all stocks? "Analysts are almost all liars marketing themselves, I don't think they need a 'break'." - When has it ever worked out for someone to say "All or nearly all people are X" when you're talking about a large group? It reflects very poorly on the author whenever they make sweeping generalizations like this. "the profession of stock analyst is about equal to Snake Oil Salesman" - Which is really just a step above name calling in the schoolyard. And a stock analyst is very different from a fund analyst but I doubt that really matters to you.

I have often suspected that one of the things that drives PG was this generalization that programmers by their very nature don't understand how business works and therefore don't need a seat at the business table. It's always better to be breaking down stereotypes rather than playing into them.

> What does that mean? That 9 out of 10 mutual funds return less than the average improvement in the Dow?

Yes, and this or something near it is a fact (http://business.time.com/2009/04/20/breaking-news-mutual-fun...). Although the underperformance typically comes from management fees, because we would expect mutual fund portfolios to average with the market. But then you have to pay the managers and analysts.

Generalizations are OK when they are true and backed up by scientific data.

The oft-cited statistic that mutual funds do not return as much as the dow ignore the concept of risk-adjusted returns. A mutual fund very well should return less than the dow if it takes upon lower risk. (However you might define risk, there are many definitions, volatility only being one.) The article presumes the goal of every investor is to maximize return vis a vis some arbitrary benchmark.

A stock-based mutual fund might actually be doing its job if it is simply not losing money when the dow surges since it's goal might be diversification via non-correlation by long-shorting the market.

There is of course some truth to the fact that mutual funds often do not earn their fees. But simply saying they cannot "beat the market" overlooks important questions about what those funds actually set out to do in the first place, and what their respective risk-taking philosophy was.

Of course, please perpetuate this nonsense, as it makes life easier for those of us who are investing relying upon it.

If you look at that data though and view 10 years it's only 58 out of 100 not 90 out of 100.

Ok, name a dependable public stock analyst, one who accurately portrays companies and makes good predictions. One of the better analysts I know of is Warren Buffet, but he doesn't share his analysis publicly, nor does he make his money based on publishing his analysis. He's also wrong sometimes, but his his right moves have far outweighed the wrong moves.

Most analysts are not Warren Buffet, or even close to it.

My favorite example: Costco. I love Costco, shop there all the time, the CEO is Mr. Fantastic as far as giant corporate CEOs are concerned in my book. Cashiers make too much money there, according to analysts. (Quoting from Wikipedia, but originally from the Houston Chronicle)

In an interview published in the Houston Chronicle on July 17, 2005, he told Steven Greenhouse that he was not interested in Wall Street analysts who took issue with his care for employees and customers rather than happier shareholders. Investors might want higher earnings, but Sinegal stated, “We want to build a company that will still be here 50 and 60 years from now." A favorite saying of his is “you have to take the shit with the sugar”. Investors who bought $10,000 of Costco stock in 1992 had $43,564 ten years later, a return of 354% (or 15.855% annually).

So it's not just "Computer Programmers" who are skeptical of stock analysts. I have a minor in Mathematics, I can compute earning ratios just as well as the analysts. I don't paint them with a broad brush because I know little about what they do, I paint them with a broad brush because I know A LOT about what they do.

And what they do is akin to "reading the bones", unless they have insider information, based on past performance. I mentioned Buffet before, but he only makes decisions when he's almost certain(and still stometimes wrong) he knows about he company he invests in. The talking head analysts I see have no such certainty requirement.

So I suppose you are an Analyst?

er Warren Buffet learned from a guy called Benjamin Graham who's books are still in print and considered clasics the K&R or Kunth of investing if you will.

Try "the intelligent investor."

Totally agree, but Buffet's angle was that you play for the long haul, right? To me that's not what an "analyst" does. It what an "investor" does. Research research research.

He's not trying to figure out what exact earnings-per-share are going to be for companies every quarter. In fact, he was trying to discourage companies from giving earnings guidance.

Well, we know Buffet knows what a company's earnings are and has his private projections. One of the way he picks a stock is based on its earnings and potential earnings to price ratio, ie: is the stock "cheap". So, whether a stock is making $.32 or $.33 a quarter he doesn't say, but I bet he has his own estimates based on his research, but probably only on the companies he's interested in.

But yes, your point he isn't what we think of as a typical 'analyst' is correct.

This meme of 'anyone who is not a programmer is an idiot' has to stop. This is incredibly frustrating and severely undermines the level of discourse.

That's not what he said.

I believe the meme is

"What _is_ a Wall Street analyst, and why are such considered credible?".

He seems to be saying, "people with idiotic beliefs are idiots." Nowhere in there are programmers mentioned or is any comparison to them made.

That's not really what he said at all.

He made the assumption that these analysts didn't do their job well, and that he in fact knows more about Google's financials/operations than they do.

The "programmer" remark jmduke made is just an assumption based on the fact that nearly everyone that uses this site is a programmer of some kind.

That's still quite a leap when programmers are notoriously bad at predicting time scales. But prediction isn't the programmer's job.

Nice try, analyst.

Most people are bad at making predictions. This is particularly true when they have incentives other than accuracy.

Programmers are not immune to that failure mode, but programming culture encourages data-driven decision-making and prizes empirical results.

One of the most maligned professions when it comes to forecasts is meteorology. Nate Silver does and excellent job here, shedding some light on the challenges and triumphs of predicting the weather.[1]

Software engineering can involve difficult models about different scaling scenarios. Civil engineering might involve unexpected surprises about how standing waves emerge in bridge design. Financial analysis involves a forecast of the total revenue stream the company will generate between now and the end of time, and a guess about what other market players will predict about the future a quarter from now, since the stock price, too, can affect its income.

Take P/E ratios for example. Should you look at them as a sanity check, or think of them as a broad measure of the market's beliefs about the issue's future growth potential?

Regardless of where you stand, it is patently absurd to state that financial analysis is not data driven, and the decision making does not reward empirically successful results. Whether you recommend your fund bets with or against the market you get less of a say next time when you have less money left to bet, or decrease your assets under management by losing your clients' money.

[1] http://fivethirtyeight.blogs.nytimes.com/2012/09/09/why-weat...

> programming culture encourages data-driven decision-making

You have to be kidding.

Actuarial work, bioinformatics, social science. These are data-driven cultures. They actually require scientifically valid and methodologically sound data to make a claim.

Programming, on the other hand, is dominated by fashion. Language wars, methodology wars, business bullshit, buzzword chasing. Programming is not data-driven AT ALL! When was the last time a computer scientist actually did some SCIENCE? When was the last time a programmer actually ran a double blind study?

99% of programming is not data-driven whatsoever. The sweeping decisions in programming are made by corporate big wigs operating on their intuition, or are design choice (extremely subjective!) made by "architects" who, for instance, created UNIX.

Were the people who created Python, Ruby, Java, C, etc DATA-DRIVEN? What studies did they use to decide that so-and-so feature should be like this and not like this?

Programming is mostly a craft and has essentially nothing to do with being data-driven. Doing A-B tests does not mean your culture is data driven when A-B tests are like 0.1% of everything you do. And most A-B tests are methodologically unsound anyway and would be shamed out of any real social science department.

Economics, on the other hand, is an actual science with actual data that performs actual methodologically sound studies using advanced statistics. Practicing economists have to use actual valid data procured from real studies to have careers. Programmers mostly twiddle their bits around until something works. That IS NOT being data driven.

Programming is NOT a science.

Funny that you should say all of this in a discussion about Google...

What Google makes per ad click is down 15% year over year and 3% for the quarter. No unicorn needed.

Prediction is difficult, especially if it's about the future.

There will probably be at least a few analyses published in the next few days claiming this miss was "obvious" for various reason, all with the equal benefit of hindsight.

If you can consistently identify things which analysts and those who follow them are prone to overlook or fail to comprehend, there's all kinds of money to be made.

Personally, I've had some great successes putting money behind my own predictions.

Some missed, and some didn't. Good thing you had the prescience to foresee this.

Care to disclose your position and total profit raked in on betting against those analysts? Stock market opinions are kinda cheap otherwise.

No, they account for such things, and did, and despite that, Google "missed" the estimated earnings.

There is no bigger industry on the planet than the financial industry. That means a ton of money flowing around. There is far more sophistication there than you give it credit for.

There is a lot of good numbers in that release.

Motorola down to be expected.

PPC yields -15% is concerning but the soon to come monetization of Shopping is going to reverse that.

The p/e is 20 vs FB at 66.

Google are still the strongest and most consistently innovative large-cap around. They've already moved past the point that MS failed at.

Google ad systems are going to be able to subsidise hardware (TVs, phones, tablets, cars) in a way no other company can going forwards.

They've already moved past the point that MS failed at.

Can you elaborate? Are you referring to the late 90s trials and their aftermath?

Microsoft tried to compete in every technology market simultaneously - spreading the inhouse talent too thin becoming nothing to anyone.

The few really good products they had (SQL Server, OneNote etc.) got lost in the noise. Everything became unstable, clunky, complicated and inconsistent.

Most kids leaving school now think Xbox when they hear 'Microsoft' - not really the legacy Microsoft deserved.

(it could all have been solved by splitting the company up in to 4 - OS/tools, Gaming, Apps, Online Services and letting them compete in their own vertical spaces without having to do things the Microsoft way - SQL Server running on Linux, VS on OSX etc.)

Google haven't fallen in to that trap - they are not competing in every single market - when they do compete in a new market they don't dilute their existing product quality - and there is a cohesion to the product strategy.

Xbox may not be the legacy they deserved, but better them leaving school thinking of microsoft with something positive that they enjoy, than something which they mock and is easy to pirate (well was when I was at high school) like windows xp.

OneNote is a ridiculously good organizational tool if used properly, hell I think it should be a forked OS. Could solve the whole "bookmark org" problem, integrating with offline content, etc. But, its not the most user-friendly for its capabilities (re: not non-technical necessarily, but, it certainly requires investment of time).

Can you please quantify the "most consistently innovative large-cap around" comment? What Google did lately which was innovative?

I'm not trying to be anti-Google, I'm just honestly asking. For example, can you compare innovations Google put forward in last couple of years and compare it with, lets say, MSFT?

Android?

Android is more like fast-following Apple and not innovative. If Android makes Google innovative, then they are not really more innovative than MSFT because MSFT did Windows Phone, Surface, Online Office (really surprisingly good - but still not innovative because Google Docs was the first), Outlook.com, etc. I think Xbox Kinect is innovative.

Android usually has features long before iOS.

EDIT: Fixed formatting (was italicized by mistake).

Just because something is not the first to market doesn't make it not innovative[1]. Android is not a feature-by-feature copy of the iPhone, and I think various Android features (Google Now for one) are quite innovative. Furthermore, Apple also "copied" various Android features (notifications for instance). Similarly, while the Kinect is universally considered as innovative, I think Microsoft's Metro UI + OS is also quite innovative in that they came up with a refreshingly different and clean interface.

First to market may drive important metrics like adoption/success/profit, but doesn't define whether a product is innovative or not.

[1] sorry for the multiple negatives in that sentence.

Google Glasses and the self-driving cars come to mind.

I'm pretty sure Microsoft was the real innovator in the vaporware space. Google is just copying that strategy.

Don't forget about IBM!

Seriously, Glass and the car projects are simply slightly more practical outputs of Google's research division. MS and IBM are doing a lot of research in areas that simply aren't as practical.

Why are you lumping IBM in with MS?

The reality is that IBM is no longer consumer facing, and neither is their research. MS still is and has to be (and losing), but IBM just abandoned being a household name a while ago, except with things like Watson.

Self driving cars. Glass. Google Now. Maps. Plus all the internal innovation such as new database technologies, custom routers, computer science research, and other technology.

There are few places that compare to Google.

Good points.

Vaporware (Self driving cars. Glass.) is not what I'm considering innovative because these things are not in production. And IBM and MSFT are very very good at vaporware.

Maps are not innovative (they might be the best for some people but, on my iPhone, Nokia maps are actually better).

   There are few places that compare to Google.

I'm not disputing that. Google is definitely a great company. But the claim was "the most consistently innovative large-cap around".

1) The self-driving cars are hardly vaporware - not only do they actually work, but Ford and other companies have large investments in the space too. Moreover, Nevada and California have already legalized robot cars.

2) Maps may no longer be the most innovative product in the space, but Google defined the tiled, online map, and they forced Apple to provide free turn-by-turn by doing so on Android.

Moreover, Google has made two press announcements (we made our own maps via StreetView, and then we made it free on Android) that destroyed the market cap of the major nav companies to the tune of double digit market cap percentage losses, which amounted to billions of dollars, in a day... twice.

3) As for Google Glass, I don't expect much from this project actually, but vaporware is not the right term for something that is already being worn and used.

1) & 3) Plenty of vaporware actually works and is invested in. Vaporware is defined loosely as stuff-we-talk-about-a-lot-but-you-can't-buy-today TM. When they release it, like Daikatana and Chinese Democracy, it ceases to be vaporware anymore.

And don't forget that vaporware does not imply non-innovation! Plenty of vaporware is innovative but fails for other reasons.

The iPhone actually uses TomTom maps, not Nokia. That said, no maps but Google maps has street view. Plus, they are moving into mapping shopping malls, parks, stores, and even tourist spots. On top of this, they use image recognition with their street view data to improve accuracy of their maps on several levels.

Don't forget the sheer amount of integrated information such as transit and traffic routes. Google maps has continually set the bar for mapping. They are so successful that people no longer even recognize that all these features were not commonplace prior to Google maps.

Edit: and if you define innovation to things in production, I straight up disagree. Innovation happens prior to production.

http://m.maps.nokia.com/

Nokia maps are accessible on iPhone without trouble.

no maps but Google maps has street view.

A similar feature to Streetview has existed in Bing Maps since 2009 [1]. Google was first, but others are chasing hard.

Plus, they are moving into mapping shopping malls, parks, stores, and even tourist spots

Bing Maps started adding malls and building maps in 2010. They also had birdeye view and 3D "photosynth" views predating Google's implementations [2] by 2 years.

[1] http://www.bing.com/community/site_blogs/b/maps/archive/2009...

[2] http://www.bing.com/community/site_blogs/b/maps/archive/2010...

Cars with 300K miles on them driving fully autonomously are vaporware? Seriously?

quoth wiki:

"Vaporware is a term in the computer industry that describes a product, typically computer hardware or software, that is announced to the general public but is never actually released"

Self-driving google cars and google glasses nominally qualify.

I have two glass blocks tied to 6 pre-ordered glass units that say otherwise with regard to glass. Unless, nominally, something that is pre-ordered is vaporware until the minute it hits my hands.

There are also people outside of Google that already have Glass units.

Most of Google's special sauce in their datacenters isn't available to the general public. That doesn't mean its vaporware, nor does it mean it doesn't contribute to its business or consumer satisfaction.

Having worked at google in the past, I can assure you that both self driving cars and google glass not only exist but are in heavy use.

In search alone, Google launches hundreds of improvements per year. Most people would call that innovation. The biggest recent example is the knowledge graph, and there was stuff like instant, but they're constantly doing algorithm changes behind the scenes that are not as visible.

They also do a lot of stuff for advertisers (their real customers) that you probably won't know about if you don't manage advertising campaigns.

Android has had lots of innovations, such as being the first NFC-enabled mobile OS, the first with turn by turn directions, voice actions and the quality of their speech recognition in general (which requires constant innovation), etc.

Google Translate.

Google Takeout.

Google Transparency Report.

The Google+ sharing model (circles), which forced Facebook to respond and implement something similar.

etc.

The people that sold Google stock are probably the same ones who bought Facebook originally..

Sounds about right - the stock market will always have irrational people :)

Speculation is that their filing agent may have accidentally released them early.

update: confirmed by R.R. Donnelley & Sons

Where is that source?

There's a quote from Google confirming in this TC post: http://techcrunch.com/2012/10/18/googles-stock-takes-a-dive-...

Also, trading was halted at Google's request while they complete the document.

> Its incompleteness was evidenced by the inclusion of the phrase, “PENDING LARRY QUOTE,” just above a summary of results.

source: http://www.bloomberg.com/news/2012-10-18/google-blames-r-r-d...

Pending Larry has already arrived on Twitter - twitter.com/PendingLarry

Looks like it took investors about 30 minutes to figure out who made the mistake:

https://www.google.com/finance?q=NASDAQ%3AGOOG+NASDAQ%3ARRD

confirmed by R.R. Donnelley & Sons

I wonder how much the bribe was? I'm sure much less than the profit on puts/calls.

Google is advertising company which enjoys masquerading as a computer science R&D lab. They build self-driving cars. They launched a satellite.

I suspect that they will start making their own SEC filings soon.

I think when you accomplish some of the things Google does, it becomes less of a "advertising company which enjoys masquerading as a computer science R&D lab" and more of "an advertising company that owns and funds a computer science and engineering R&D lab".

I much prefer "a computer science and engineering R&D lab that happens to have an advertising arm".

Advertising is where they make their money. It is nice that they do cool things, but few of those things have anything to do with their core business.

My point was that they do a lot of fun things that aren't core to their business. Properly filing their SEC documents might be worth a little more attention. Not quite as sexy as self-driving cars, but if they can't keep the core business running then they won't have time for autonomous cars.

Well that was an easy short. RRD dropped long after your update. Nice work Uptown!

Some poor bastard on another forum I read had short put options open and was literally in the middle of closing them (due to earnings release at end of market) with his mouse when the stock dropped.

This doesn't sound that terrible. One enters into a short put position when he believes that XYZ company is worth buying at $X, but not at the current price. So you open the short put position at the $X strike price and either collect the premium if the stock doesn't go down, or be assigned the shares at the price you think they're worth if the stock does go down. Assuming you did your research right, both are good positions to be in.

And remember: if a particular option you're selling has a really high premium, it's because the market expects the position to be risky.

Being forced to buy 700 dollar shares at 760 (or whatever) is not a good position to be in. Especially if you don't have the money, which happens often enough.

My brokerage won't even let me open the position without having enough money to cover the share assignment.

I'm not a stock expert and we have limited information here but I think I understood the dilemma in a different way, perhaps someone can fill us in. I took OP's explanation that this man had actually shorted (sold options he didn't own) put options in the past. If their strike price happened to be very close to the Google share price early this morning, and they expire this Friday, then they would be relatively cheap to close (i.e. buying them back to close his position). However, the price drop would cause those same put's to jump in price by roughly the loss on a share. So what would cost him a few dollars or pennies per share to close, now costs $60 per share to close. Options are traded in 100 packs so I take it this put him back thousands.

What you said has little to do with dollars and cents and more to do with perspective. People short puts for all kinds of reasons, only one of which is that they believe the stock is worth buying at that price. For example, someone might short a put if they have strong convictions the stock is going to have lower volatility than the implied vol of the price of the option, regardless of the intrinsic value of the stock. Or, as is likely in this case, that the market has priced in excessive volatility pre-earnings. From strictly a money point of view, this guy is sitting on a large unrealized loss simply because this thing unexpectedly got leaked. This event was obviously not priced into the option chain. His intention was to not be exposed to GOOG post-earnings and the black swan event of some idiot mis-releasing earnings caused him to get hammered.

kind of stoked about this, been waiting for an opportunity to go long GOOG due to their autonomous car moat they're carving.

their autonomous car project is folly

Prove it.

Google is incompetent at expanding into adjacent markets to search engine marketing. That is their core competency. You think they can enter the automobile industry? You're insane.

Who says they need to "enter the automobile industry?" They just need to license their tech. Also, nobody else is going to be able to do it anytime soon without their data. The cars rely upon the street-level map data Google has, and nobody has as it or is any position to get it anytime soon.

That's why they failed at building a mobile operative system. Same happened when they tried to get into the email business. Or the office applications sector.

Oh…

And web browsers :)

So this is a nice long list of reasons to "go long GOOG"? Let's add up the billyuns they've made in:

Mobile operating system: we'll get back to you on that

Email business: brand investment!

Office applications: Literally hundreds of satisfied paying customers, a few even break into 3 digit employee counts. Coming to offline any decade now.

Web browsers: the tracking data is worth a hundred times what we paid for in commercials and r&d.

You may have missed this: http://mashable.com/2012/06/28/google-docs-offline-io/

why do you think so?

Is it really such a moat? Probably other people are trying to build autonomous cars but have the sense not to talk about it.

The moat comes from the fact that I'm pretty sure Google's success with autonomous cars comes from their integration of AI and their maps infrastructure. The cars drive well because they have the data from cars that have previously driven the same route. This synergy between big data, infrastructure, algorithms, and hardware is extremely hard to replicate and is exactly the sweet spot at which Google is the best in the world.

Basically, I think the reason you hear about Google's cars and not other peoples' cars is because Google's happen to actually work. The constant thesis of Google itself has been that dumb algorithms and lots of data works better than smart algorithms. They've cracked many, many long-unsolved problems by tilting their thinking in this direction (examples: search, NLP, voice recognition, translation.) Autonomous car navigation is the next one, and in this case the data is extremely difficult to get. Who else has had cars driving around for the last 5 years collecting street-level data? Who else is even capable of building the systems to collect, process, and organize such data?

It's a long play though. I don't think you'll start to see GOOG react tangibly to the autonomous cars project for another 4-5 years or so. But my guess is that their success will be on-par with the iPhone in terms of generational leaps ahead and barriers to entry, if not more. If Google manages to get their technology into most major car manufaturers' vehicles there will be massive switching costs due to integration expense. As soon as one manufacturer has Google technology in their cars, provided consumer reaction is positive, they will all want it. Once they are in, they are in, and there will be recurring revenue via software updates and next-generation capabilities for newer vehicles. Hell, they could even have a service model, where manufacturers or consumers themselves pay a monthly fee for autodrive service.

Of course, their current valuation may or may not justify this, if you presume their EPS growth due to autonomous cars will be offset by low growth in their current cash cow, adwords. I honestly think this is a bigger risk than the risk that autonomous cars will not work out though. It's going to happen, and it appears they are very far ahead of everyone else.

Panic anyone?

If it has indeed been an accidental release, someone is going to pay very dearly for it.

Just read some article which talks about the "fear" that consumers may be getting smarter and increasingly relying on direct searches and mobile apps (aka Amazon website, Amazon mobile app) instead of going through Google. If that is correct, then it sounds like a shift in the market rather than shrinking. Admittedly though it sounds more like a rationalization of reduced earnings with no direct proof.

Trading has been halted as well.

Why do they do this? Isn't the whole point of the free market that the prices stabilize quickly without interventions?

Google requested to halt so they could finish the report. The early released version is not 100% finished.

Because the market is "stabilizing" on possibly inaccurate information that was not meant for release. It goes into securities fraud pretty quickly if you knowingly put out incorrect financials and allow trading.

Because the price fell dramatically from a release of information that wasn't from Google. Until its confirmed by Google it's just speculative which NASDAQ doesn't want.

Source: http://www.nasdaqtrader.com/Trader.aspx?id=TradeHaltCodes

Normally earnings are released when the markets are closed, so this doesn't seem so unusual.

Yeah, everyone loved the free market back in 1929.

The 1929 stock market collapse was an accurate reflection of real-world economic conditions, it wasn't a panic crash and it didn't cause the great depression. There are a ton of theories about why the depression happened but pretty much none of them claim fiddling with the stock market rules would have helped anything.

Stock prices during the depression were reasonable, they were just news nobody wanted to hear.

Economists also think that WWII ended the depression.

As if flattening the major cities of every developed country except the U.S. and spending the majority of the world's economic activity on objects whose sole purpose is to destroy and be destroyed. That brought prosperity.

well, relative prosperity.

Some do, others don't: http://www.econtalk.org/archives/2008/12/higgs_on_the_gr.htm...

Free markets are not immune to panic.. a few hours break in trading that affects everyone is fair, and allows participants time to analyse whatever news release occurred, rather than knee-jerk liquidization of their positions, which they may come to regret after cooling off.

This one was automated AFAIK, since GOOG dropped so hard. See http://en.wikipedia.org/wiki/Trading_curb

Definitely not the first time RR Donnelley has dropped the ball.

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