Yesterday, most everyone was caught well off guard when prominent NDX (Nasdaq 100) component Google (NasdaqGS: GOOG) “leaked” its earnings report hours before the scheduled release which was planned for after market hours.
GOOG stock fell precipitously, trading as low as $676 on an intraday basis after registering earlier highs of $759.42. The intraday range in the stock was quite incredible, as was trading volume (>12 million shares, in terms of “dollar volume,” more than $8 billion in intraday turnover given GOOG has such a high “handle.”)
GOOG was halted intraday, with news pending as efforts were made to “contain the damage” after the errant early earnings release, which made an otherwise sleepy October Thursday most interesting throughout the rest of the session. [Google Earnings Snafu Adds to Tech ETFs’ Woes]
ETFs that contain GOOG in prominent weightings include FDN (First Trust DJ Internet, 11.00% weighting), PNQI (PowerShares Nasdaq Internet, 8.95%), IYW (iShares DJ U.S. Technology, 7.79%), IGM (iShares GS Technology, 7.44%), XLK (SPDR Technology, 6.54%), IXN (iShares S&P Global Technology, 6.12%), SOCL (Global X Social Media, 6.05%), QQQ (PowerShares QQQ, 5.65%), MOAT (Market Vectors Wide Moat Research, 5.56%), and VGT (Vanguard Info Tech, 5.24%) to name a few.
Thus, as one would expect, when a prominent index member’s stock is halted on an intraday basis, it becomes significantly more difficult to properly value the ETF and underlying index itself because of the fact that the said halted equity cannot be fairly valued if it is not trading openly in the marketplace.