When Algorithms Attack: How Googlebot And Tribune (And Some Idiot) Killed United Airlines Stock

Why did United Airlines (UAUA) stock suddenly plunge from $12 to $3 the other day? Because everyone on Wall Street thought the company had filed for bankruptcy. Why did everyone on Wall Street think the company had filed for bankruptcy? Because:

1. The airline industry is reeling from $100+ oil, and airlines like United file for bankruptcy at the drop of a hat
2. A news summary on Bloomberg (incorrectly) said the company had filed for bankruptcy.

We knew that much the other day. And now we know the full story.

1. At 1AM last Sunday morning, a 2002 article with the headline “UAL Files For Bankruptcy” suddenly appeared in the “Most Popular” section of the web site of the Tribune-owned Florida newspaper Sun-Sentinel. Why did this happen? Tribune doesn’t explain precisely. Because it happened at 1AM, however, it seems reasonable to assume that traffic to other stories on the site was very light, meaning that it didn’t take much to make the story popular.
2. Googlebot found the article and made it searchable within Google News.
3. A non-detail-oriented securities analyst summarized the article (apparently without reading it first) and uploaded the summary to Bloomberg.

By Monday morning, UAL stock had plunged to $3 a share…