The Tweet Heard 'Round the World
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It's hard to imagine that a single tweet from some random Project Runway judge would send a heavily traded stock up almost 5%, but that is exactly what happened yesterday. Well, at least that's the only thing people can seem to come up with for why nosediving J.C. Penney (NYSE: JCP) finally closed up. Nina Garcia: Project Runway Judge, Marie Claire Style Director, J.C. Penney Style Voice and Fashion Collection Curator (ahem). Ms. Garcia tweeted the following on July 25 at 2:02 PM:
I'm @jcpenney's HQ. Thank you Ron Johson (sic) for the walk through of JCP's prototype. Get ready to shop! Its going to be a game changer!
The interesting thing is, though, the stock started popping before the tweet was published:
You can also see that volume spiked around the same time. So what happened here? Usually a pop based on something as amateur as a tweet would be rooted in light volume; institutional investors certainly wouldn't use social media for trading, right?
Well believe it or not, there are hedge funds out there trading off Twitter. As WSJ Marketbeat suggested (pretty cheekily), perhaps Twitter servers are housed near those of a powerful fund? Unlikely, and still, the most a fund can expect to generate with their multi-million dollar servers is a few milliseconds of lead time. Was this just a coincidence, or was there something a little dirtier going on? Would someone actually expect a tweet to be so influential as to warrant an investment?
Whatever comes of this, it is unlikely J.C. Penney will maintain the highs seen on July 25. In order to compete with the likes of Target (NYSE: TGT), which unveiled CityTarget yesterday, an actual store with real walls made of concrete rather than hype, JCPenney will have to prove itself with the consumer.
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