Yesterday at 3:07 p.m., a select group of traders received an extraordinary, advance look at Twitter's earnings for Q1 2015 that were set to be released after the market closed at 4 pm. Armed with the knowledge that Twitter's below-expectations earnings would almost certainly cause Twitter's stock to drop, these traders were able to quickly purchase put options and sell call options before Twitter's earnings were released to the public. According to one estimate, the money made from these puts and calls totaled roughly $80 million.
The traders' early access to this valuable information came from a data service called Selerity. According to its website, "Selerity is a technology and media company that uses proprietary data science to deliver real-time data, news, and content analytics for demanding users in the financial services and publishing sectors." In this case, of course, Selerity didn't just deliver real-time data but, more accurately, ahead-of-time data.
How did Selerity get its hands on Twitter's earnings before the rest of the market? As Selerity itself tweeted yesterday, there was no "hack" or "leak" involved. Rather, the early access appears to have been the result of some diligent sleuthing by Selerity combined with a very poor data protection effort by Twitter. As a Selerity executive explained to The Verge, Selerity has an automated system that monitors companies' investor relation websites as their earnings release dates approach. "In this instance, I am assuming that Twitter mistakenly posted the earnings to the website early," the executive stated.
According to Mashable, Selerity did not simply stumble upon the earnings release. Although the the company that handles Twitter's investor relations page did publish the page early, the link to that page was not publicly known or available. Selerity knew, however, that
The URL scheme Twitter used was "https://investor.twitterinc.com/releasedetail.cfm?ReleaseID=XXXXXX." The last published news release had the ID number of "905554."
Presumably, Selerity just had to continue to try iterations of that number sequence until it found the report. Twitter's Q1 2015 earnings had an ID number of "909177" — meaning the Selerity web scraper would have had to try less than 4,000 numbers before hitting on the right one. Given today's processing power, that could happen in the blink of an eye.
The end result was that Selerity used its automated system and some aggressive digging to ferret out information that turned out to be very, very valuable to its clients.