Not quite.
Shares in Blockbuster were halted on Tuesday after Bloomberg – citing one source – reported the video and DVD rental giant had retained law firm Kirkland & Ellis for advice on a possible bankruptcy filing.
Result:
Reuters followed up with a story of their own about an hour later. By then various online message boards and the popular Twitter-based StockTwits site were abuzz with variations on the theme of “Blockbuster files for bankruptcy.”
Which of course, it hadn’t.
Moreover, according to this Dow Jones report:
A Blockbuster spokeswoman, however, said the firm was hired “for assistance with our ongoing financial and capital raising initiatives.” “We do not intend to file for bankruptcy,” said spokeswoman Karen Raskopf in an interview.
Raskopf said Blockbuster plans to discuss “the progress we’ve made” on its initiatives to raise capital during its fourth-quarter earnings conference call on March 19.
But the damage had already been done. Some commentators rushed to laud the supremacy of Twitter over “MSM”, or main stream media, since the “news” was rapidly spreading on Twitter but had not yet been picked up by Google or Yahoo news. Barry Graubart, who penned the “Twitter leads” post also erroneously reported that Blockbuster was filing for Chapter 11.
He later added a clarification, but did not correct the assertion over the filing:
Clarification: a few tweeters* pointed out that the news originated on Bloomberg. That’s correct. It was posted to Bloomberg News around 2:01pm EST. What I was noting was that the Twitter community (and StockTwits users in particular) were sharing and commenting on that story by 2:07pm while the mainstream web news sources like Google and Yahoo did not pick it up for another 30 minutes. Real-time financial news still beats almost any web source, especially when you’re a professional user with a high speed pipe, but Twitter is proving that the real-time web can beat traditional web sources in many instances.
This raises an important point. As non-traditional means of content distribution go mainstream, so too do the opportunities for “Chinese whispers”, error, rumour-mongering and hearsay. At this point, the community of traders on StockTwits is not large enough to do serious damage to a stock that may be the subject of a rumour or misreported-news, but investors, regulators – and companies – need to be alive to that possibility.
Caveat reader.
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(* This reporter included)