[Slate] Motley Fool moves shares of Celera.

Adam Rifkin -4K (adam@XeNT.ics.uci.edu)
Wed, 29 Dec 1999 23:45:10 -0800 (PST)

I laughed when someone put a price target of a thousand on CommerceOne
last week. I cried when someone put a price target of a thousand on
Qualcomm today. But the Motley Fool making Celera Genomics double in a
week? Mercy, I call mercy!!! Make it stop!!!


> When the Motley Fool Speaks, (Some) People Listen
> by James Surowiecki
> Posted Tuesday, Dec 28, 1999, at 3:48pm
> The Internet has become such a central part of both the U.S. economy and
> the American cultural landscape that it's easy to imagine that a real
> convergence between the offline and online worlds has happened,
> particularly when it comes to the media world. But the truth seems to be
> that for a lot of the offline press, and for much of Wall Street, what
> happens on the Internet is still either something of a mystery or,
> almost by definition, too sketchy to take seriously.
> Take the case of Celera Genomics, a biotech company that offers
> information from its genetic databases to drug makers. Since the close
> of trading on Dec. 16, Celera's share price has risen from 76 to 160, or
> better than 100 percent. The company's trading volume has skyrocketed as
> well. Just 110,000 shares traded on the 16th, while 1.69 million changed
> hands on the 17th, and the stock has had volume of a million shares or
> better every day since then. (Well, technically, on the 23rd only
> 997,000 shares traded, but that's pretty close to a million.) The stock
> leapt 11 points on the 17th, 15 points on the 20th, and 23 points on the
> 21st, fell back a little on the 22nd, and then bounced further ahead on
> the next two days.
> Even by the standards of this wacky momentum-driven market, that's an
> impressive and really surprising move, and it did not go unnoticed by
> either the New York Stock Exchange or, eventually, by the financial
> press. On Dec. 20, for instance, the NYSE asked Celera itself whether it
> knew of any reason for the sudden spike in its stock, and the company
> said, sensibly enough, that it did not comment on its stock price. Three
> days later, the NYSE had to declare an order imbalance at the open
> because there were too many buy orders and not enough sell orders on the
> books. And Bloomberg and Reuters both ran pieces on Celera's ascent.
> The odd thing, though, is that no one has actually reported what
> happened. Bloomberg, for instance, blithely attributed the run-up to
> "increased enthusiasm for genetic information companies and for
> incorporating genomic research into drug development." As for why that
> enthusiasm suddenly hit investors with such force, and why it was so
> focused on Celera, all Bloomberg could offer was an article that
> appeared in the New York Times on Dec. 20, which included a one-line
> reference to Celera. Bloomberg quoted an analyst with Banc Boston
> Robertson Stephens who confidently said, "The New York Times article
> would be the trigger today." Reuters, meanwhile, came to the story
> yesterday, including Celera in a broader piece about a boom in biotech
> stocks, a boom that, weirdly enough, it suggested began about 10 days
> ago, on the 17th.
> What everyone appears to have missed is that on the evening of Dec.
> 16, The Motley Fool, an online investment community with more than 2
> million unique visitors a month (and my former employer), announced that
> it would be adding Celera to its "Rule-Breaker Portfolio" in the next
> five days. (The Fools announce all their buys in advance of actually
> making the purchase in order not to front-run the stock.) The very next
> day, Friday, volume in Celera was 15 times higher than it had been on
> Thursday, and the stock's dramatic rise was under way. It's probably
> true that all the stock's rise can't be attributed to the Fool's
> influence, especially since Celera did announce an important acquisition
> on Dec. 23. But it's also true that many more investors are now paying
> attention to Celera than were before the Rule-Breaker buy, and that now
> includes lots of people who have never even visited the Fool site.
> Whether you think this is a good thing or a bad thing probably depends
> on what you think of the Internet's impact on financial markets. I think
> a good argument can be made that in this case, what you're looking at is
> not a speculative bubble but rather an example of potentially valuable
> information--not the Rule-Breaker Portfolio's decision to buy, but its
> explanation of why it was buying--being disseminated to a much wider
> audience than would once have had access to it. But the really
> interesting thing is the almost complete obliviousness of the offline
> media to what actually happened, and the forced nature of their
> explanations for Celera's rise. You didn't even to have to work hard to
> find out about the addition of Celera to the portfolio, since the Fool
> put out a news release announcing it. Call it willful blindness, then.
> Apparently the Net still has a ways to go before the offline press can
> really take it seriously.


And we're gonna party like it's nineteen ninety ni... hold up, it is!
-- Will Smith, "Will2K"