A flurry of trades more than five hours before the US stock market opened in New York on Thursday seemingly wiped out more than $22 billion in value for an information technology company in another case of mistaken identity.
(Bloomberg) — A flurry of trades more than five hours before the US stock market opened in New York on Thursday seemingly wiped out more than $22 billion in value for an information technology company in another case of mistaken identity.
Shares of CDW Corp., an Illinois-based member of the S&P 500 Index, changed hands for less than $7 a piece — 96% below Wednesday’s closing price of $173.25. The erroneous transactions were driven by investors who bungled the company’s ticker and mistook it for newly public CaliberCos Inc., which goes by the ticker CWD. The trades went through when CaliberCos was trading around $7.
“I could imagine CDW going down 5% — that would make some sense to me that a couple of morons got the symbol wrong and put in some bad trades,” said Matthew Tuttle, chief executive officer of Tuttle Capital Management. “But 96%? That doesn’t make sense to me in any way, shape or form. There’s got to be a halt or something to avoid having people potentially being taken advantage of.”
By the end of Thursday’s session, shares of CDW — with a market capitalization of around $23.6 billion — were up 0.9% to $174.73.
Meanwhile, Arizona-based CaliberCos, valued at around $162 million, was up 28% to $7.70. Shares of the company, which went public Wednesday, were halted for volatility less than 30 seconds after the market open before resuming trading.
Trades Canceled
The New York Stock Exchange and Nasdaq said around 7:45 a.m. New York time — some four hours after the mistaken trades — that the transactions would be canceled. The move left traders who flipped shares at far lower prices in limbo.
“Great, you’re going to bust those trades but now you have the person on the other side who’s sitting on massive paper gains, did nothing wrong and is told they can’t have it,” said Tuttle. “Somebody, somewhere has got to take a look at how this happened and find out how to make sure it doesn’t.”
CDW and CaliberCos representatives didn’t respond to requests for comment. Both NYSE and Nasdaq declined to comment.
Just last week, NYSE had to cancel trades in Hong Kong-based Top Financial Group Ltd. after its shares sank despite the US Securities and Exchange Commission saying trading would be temporarily suspended. Earlier this year, traders fumed over the handling of options and stock trades in failed lenders including Signature Bank.
Chaotic Precedents
Thursday’s mishap comes less then four months since a chaotic open for some stocks listed on the NYSE sent chills across Wall Street as large US firms seemed to lose billions of dollars in market value for no apparent reason, leaving some investors frustrated and others clamoring for an explanation.
The manic trading was just another example of traders mixing up tickers in hopes of getting in on profitable trades, investors agreed. Earlier this year, Republic First Bancorp Inc. wrote a letter on the company’s website reminding users that they “are NOT First Republic Bank,” as the latter dealt with fallout from the banking crisis.
Elon Musk sparked a 5,100% rally in Signal Advance Inc. in 2021 after he tweeted about the unrelated messaging service Signal. During the early days of the pandemic, the popularity of Zoom Video Communications Inc. fueled brief surges in the shares of Zoom Technologies Inc., after traders confused the two firms’ tickers.
Traders also bid up shares of marketing firm ClubHouse Media Group Inc. by more than 1,000% in 2021 after confusing it with a similarly named app.
–With assistance from Katherine Doherty, Bre Bradham and Subrat Patnaik.
(Updates shares.)
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