People often say social media is a big waste time, but perhaps they should consider the fact that an unknown Wall Street trader just made $2.4 million off a tweet. And it all happened in the span of 28 minutes.
On March 27, a Wall Street Journal reporter tweeted that Intel was in talks to buy Altera, a computer chip maker.
This prompted the unidentified trader to buy around 300,000 shares of Altera for $110,530 just a minute after the tweet went up at 3:33 pm. Two minutes later, at 3:35 pm, trading on Altera was suspended as a consequence of the news surrounding the merger.
According to the New York Post, Altera stock was trading at around $34 but had a call option of only 35 cents, which is why the move only cost the trader around $110,000.
Trading reopened at 3:40 pm, and in less than half an hour, the shares had risen 28 percent to around $44, or $8.50 per option, Fortune reports. Thus, the trader made huge profits in barely any time.
There are several theories as to how this was accomplished. The news of the merger obviously drove up the value of Altera. The question is how the trader found out about the deal.
It's conceivable this individual was simply on Twitter at the perfect moment and jumped at the opportunity. Others speculate it was accomplished by a trade bot, or computer.
The more controversial possibility is this individual may have known about the deal prior to any announcement but was waiting for it to become news before making a move.
All of this relates to an ongoing debate surrounding the fine line between high-frequency trading and insider trading.
Regardless of the circumstances, it's astonishing that a single tweet allowed one person to make millions of dollars in less than 30 minutes.