Nasdaq apologises for 45-second Twitter earnings release error

An "operational" error that lasted only 45 seconds was behind the premature release of Twitter's disappointing quarterly results on Tuesday, Nasdaq admitted as the social media site's shares fell sharply for the second day running.

Shareholder.com, a Nasdaq unit that manages investor relations for Twitter and other listed companies, made its second earnings release blunder in less than seven months.

"The posting was caused by an operational issue that exposed the release on Twitter's IR website for approximately 45 seconds," a Nasdaq spokesman said. "During those seconds the site was scraped by a third party that publicly disseminated the earnings information."

"We regret the incident and remain fully committed to providing the highest quality investor relations communication product and services to our clients," the spokesman said.

Twitter shares had fallen more than 5 per cent by midday on Wednesday to below $40, compounding an 18 per cent drop on Tuesday as investors digested the news that the social media site had missed revenue expectations and lowered its guidance.

Nasdaq shares were down 0.9 per cent at $48.86

Dick Costolo, Twitter's chief executive, said the early release of the earnings "wasn't a particularly pleasant experience" and he wanted to discuss it with Nasdaq.

"Whenever you outsource something to a third party, it is because they have competences where you don't have competences," he told CNBC. "It is absolutely something we need to talk about."

Investors were also unhappy. "Obviously it's a bad thing," said a fund manager who owns a small stake in Twitter. "There's no doubt about it; this shouldn't happen. It's bad for the company and it's bad for investors, but luckily it doesn't happen often."

The US Securities and Exchange Commission will probably review the earnings release snafu, but it is too early to say whether the financial regulator will take any additional action, according to people familiar with the matter.

The SEC is concerned that the Twitter release comes months after a similar leak occurred at Shareholder.com with JPMorgan Chase's earnings in October, the people said.

Selerity, a company that crawls the web for market-moving data and feeds it to clients, including high speed traders, found the results on Twitter's investor relations website and tweeted out the figures with the hashtag "BREAKING".

Selerity has also "leaked" information early from ADP's employment report in December 2014, and Microsoft's quarterly results four years ago.

Brian Wieser, an analyst at Pivotal Research, said the dramatic fall in Twitter's stock price was "not a surprising reaction" given that the company missed analysts' expectations. But he said the early release, during trading hours, rather than after the US markets closed as planned, might have caused the stock to fall even further.

"The fact it came out early doesn't help as it means significant trading volumes can move and build on the reaction," he said. "We could have well have had that reaction the next day if it had come out as intended but it took away from Twitter's ability to control the narrative."

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