What Just Happened to Google?

Includes: BBT, GOOG
by: Felix Salmon

If you're a fund manager, you're long Google (NASDAQ:GOOG), and you need to report the value of your position as of the end of the quarter, what on earth are you going to say?

Google traded in a surprisingly narrow band for most of today, between $405 and $415 per share. Then, in the final three minutes of the day, everything went batshit. Volume spiked sharply, and the stock gyrated insanely, first spiking up to $489 and then spiking down to just $200 or so before officially closing at $349. In the sanity of the aftermarket, it's now back to about $405, where you'd expect it to be.

Following its investigation, the Nasdaq is probably going to void all GOOG trades in the final few minutes -- something which has one trader, at least, mildly miffed. But just look at the official datapoints: share volume of 12 million shares (that's about $5 billion), more than double the normal amount; an intraday high of $489, and -- most improbable of all -- an intraday low of just 1 cent per share. The poor MarketWatch website can't cope at all, and now says that Google's close of $341 represents a drop of $171 per share. (No, it didn't close yesterday at $512.)

The weirdness in Google stock reminds me of what happened to BB&T bank (NYSE:BBT) yesterday: It never traded below $36 per share until the final minutes of trading, when suddenly it spiked down to a close of $31, only to jump straight back up to the mid-30s again as soon as the market opened this morning.

Will the BB&T trades be voided too? These things matter, and not just for people holding knock-out options and similar exotica, but also in the real world -- quite a few executive compensation packages are tied to things like the lowest level the share price closes at during a certain period.

In a market with volatility through the roof and thousands of stocks trading, a few crazy closing prices are only to be expected. I expect the Nasdaq and NYSE will do their best to void them, even if that does annoy a handful of day-traders.

Update: Nasdaq has acted:

Pursuant to Rule 11890(b) NASDAQ, on its own motion, has determined to cancel all trades in security Google Inc Cl - A "GOOG" at or above $425.29 and at or below $400.52 that were executed in NASDAQ between 15:57:00 and 16:02:00 ET. In addition, NASDAQ will be adjusting the NASDAQ Official Closing Cross (NOCP)and all trades executed in the cross to $400.52.