If you’re looking for a party, Wall Street probably isn’t the place you’re going to find one. And to make matters worse, there are apparently people out there who are wilfully trying to make the life of the people on Wall Street (and subsequently, the rest of the world) even harder. By making up fake stories. And publish them on CNN’s Digg – iReport.com. Some individual had posted a fake report last Friday, claiming Steve Jobs had suffered from a heart attack and was rushed into the hospital. As a result, Apple’s stock made a 10% nosedive.
iReport is pretty much like Digg. People only need an email address in order to post news, providing a soap box for us normal folk to get our news published. True to its tagline ‘Unedited. Unfiltered. News.’, this also means that there’s no quality control, no fact checking, no nothing. And this can have disastrous results, as the Apple story shows us.
The story was first submitted to MacRumors.com, but the website’s owner did some background checking, and quickly found out the story was a fake, and consequently didn’t post it. The story also appeared on Digg, but didn’t make the front page, and – as we know – on iReport. It was picked up by the respected Silicon Alley Insider, which simply said something along the lines of “There’s a report that Steve Jobs might have had a heart attack, we’re fact checking right now”. Not too long after that, Apple denied the story, Silicon Alley Insider updated the item, stating it wasn’t true. In the time between posting and updating, Apple’s stock made a 10% drop, but quickly recovered after Apple made clear it wasn’t true.
Instead of blaming this whole citizen journalism thing, MacRumors’ Arnold Kim places the blame squarely at SAI, claiming it was their report that gave the story credibility. SAI’s founder Henry Blodget disagrees, and wrote to CNet:
The Steve Jobs report was the lead story on a site operated by CNN. It was highly relevant to anyone who cares about Steve or Apple. […] It was already getting notice when we heard about it. We never know how long it will take to confirm or reject information like that, and we knew our readers would want to evaluate it themselves. So we described exactly what the report was, said we didn’t know whether it was true or not, and said we were investigating. Twenty minutes later we broke the news that the report was false.
CNet argues that SAI does deserve part of the blame for this little episode, but I have to disagree vehemently with that notion. SAI was crystal clear in its original story that this was a dubious, unconfirmed rumour, and that they were in the process of contacting Apple to confirm or deny the story. What more can be expected of an online news outlet? It’s their job to bring the news – it’s the reader’s job to read properly, and not to jump to all sorts of wild conclusions in the process. The shooter is responsible for a shooting incident – not the gun shop.
OSNews isn’t a website focused on reporting on something first, so we usually get the time to aggregate some interesting sources, confirm a story’s credibility, and post or discard it according to that information. A website like SAI doesn’t have that luxury, as they are more focussed on being the first. Thanks to the wonders of the internet, they can post a “placeholder” story with the first bits of information, wrapped in careful disclaimers, and then update the story as events unfold. This is one of the things that a lot of people like about online news outlets.
What have we learned from all this? First, Wall Street folk get their nickers in twists way too easily. Two, readers cannot read. Three, Digg and its clones are not reliable news sources. Let me just say that if any of these three are new to you, I’m interested in how you got this far on teh interwebs.
This leaves us with one question, a question that has been asked over and over again: how important is Steve Jobs to Apple? If such a fake report can make the company lose 10% of its market value, what would happen if His Steveness were to really be injured – or worse yet, killed – in an accident? Has the company been focussing on Steve Jobs too much? Is this the downside of having a rock star CEO?
Any high profile change will affect the stock market, and the SEC is aware of this, which is why they have all those laws about stock manipulation which is what this could easily be considered.
We even have similar laws protecting people, but they are far less effective because we cannot force people to believe something about a person. How many teachers have been falsely accused of abuse, been cleared of all charges, but are still banned from or simply not hired for teaching ever again?
I dearly wish this would serve as a wakeup call for all those people who react to rumors, threats, and stories “just in case they’re true”, but let’s be realistic. I’m an idealist, not an idiot.
Far too many people lack good judgment, but love to make judgments when they can remain anonymous. I don’t know about you, but scares the living $#!& out of me.
Thom, I too vehemently disagree, but with you. Real journalists do not publish anything they have not confirmed with at least two independent sources, or anyway that’s how it used to be. You don’t get a free pass because you’ve added at the end of your report a disclaimer that you’re waiting for a statement from Apple and updates will be posted as they come. The story being unconfirmed doesn’t mean it is false and many people, especially in these economically turbulent times, will choose to act on the worst case scenario and try to beat the rest of the market to the punch. I consider Silicon Alley Insider a fairly serious web publication and I think they should have known better.
As for what will happen with Apple and their stock when Steve Jobs really dies, well, the most likely scenario goes something like this: apple’s stock takes a hit, likely more than 10%; the company’s well rehearsed succession plan kicks in; at the end of the next quarter they announce that the profit and the growth are just as healthy as ever and the stock recovers a bit; in six months Apple release some new fancy-shmancy products and again report healthy growth and profit and the stock recovers more, probably completely; in a year no investor remembers or cares about Steve and the stock is once again valued based on a mix of rational and irrational indicators.