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We are perhaps the only public company that shares financial results internally in the weeks before the quarter is closed. We announce these numbers at a quarte

by ad8e 5y ago

We are perhaps the only public company that shares financial results internally in the weeks before the quarter is closed. We announce these numbers at a quarterly business review meeting with our top seven hundred or so managers. The financial world sees this as reckless. But the information has never been leaked. When it does one day leak (I imagine it will), we won’t overreact. We’ll just deal with that one case and continue with transparency. The CEO of Netflix says this in Ch 5 of his book No Rules Rules. The leak is a predictable result and will happen again. He believes the tradeoff in openness is worth it. If this $3 million is the only incident, maybe he is right.

tw04 5y ago
Honestly it seems like a win-win. Anyone trading on the information is likely to be caught and I doubt they want someone in a position of power who would commit that sort of crime. As far as I can tell the company isn’t legally or financially liable so I don’t see a downside?
- daniel_iversen 5y ago
  Aren't Netflix essentially enabling market manipulation (which insider trading technically could be a part of) which surely must violate some sort of legal codes (maybe even for the directors of the company! I.e. in Australia we have laws around "Director Duties" where as a director can be held liable for all kinds of behaviour when it reaches a certain scale incl. honesty, debt, insider trading etc.)
yashap 5y ago
IMO it’d be great if going public meant that you had to publish open, online, real(ish)-time dashboards of your company’s core metrics. Like if it’s a metric in every quarterly report, it goes in the public dashboard, and has to be no more than X stale (1 hour? 1 day? Something like that). Many public companies already have something like this internally, it’s just really locked down. Open it up and most insider trading goes away.
- judge2020 5y ago
  I'm no financial expert, but it seems this would uber-stabilize the stock since algorithms (ingesting via scraping or human data entry) would trade near-perfectly based on the statistics, leaving little speculation for retail investors/other impulse trades.
  - andruby 5y ago
    Until there is a “fluke” in the data. A bug, or an exceptional change. Things that would normally be corrected in the manual GAAP process before reporting. But now all the algorithms crash or bubble the stock price and a lot of people loose money. I’d love to see such (near-)realtime metrics though
  - skybrian 5y ago
    No, because even assuming an efficient market, future earnings are still uncertain, people will have different opinions about them, and that's most of the ballgame.
  - bwilliams18 5y ago
    That assumes that everyone, and every algo would take those metrics and translate and interpret them into a consistent share price. The value of any company, is only loosely linked to it's performance at any given point in time, and is highly dependent on assumptions (eg. rev. vs. cost growth) over time. This would reduce the information disparity between insiders and the market, there's still plenty of room for speculation.
- toast0 5y ago
  There's a lot of work that goes into verifying the numbers before they're reported, and you really can't do that on an hourly basis, and a daily basis would really be pushing it. Generally Accepted Accounting Principles aren't always entirely straightforward to apply; you can't just look at the bank balance every day, and internal dashboards don't have the same rigor that reported data must have.
  - 5y ago
yibg 5y ago
I don't think this was a leak from the QBR. The QBR goes into a lot more detail around finances etc. Sounded like this case the person was just trading off of subscriber data, which has other sources besides the QBR.
p2t2p 5y ago
They are not the company that does it. My company does it but they the trading tool they provide you for multiple weeks around the event.
ralusek 5y ago
Is this the chaos monkey equivalent of their financials?
dheera 5y ago
> The financial world sees this as reckless. And why should we care what some old farts at Wall Street think? They can run their company however they see fit.

by ad8e 5y ago

tw04 5y ago

Honestly it seems like a win-win. Anyone trading on the information is likely to be caught and I doubt they want someone in a position of power who would commit that sort of crime. As far as I can tell the company isn’t legally or financially liable so I don’t see a downside?

daniel_iversen 5y ago
Aren't Netflix essentially enabling market manipulation (which insider trading technically could be a part of) which surely must violate some sort of legal codes (maybe even for the directors of the company! I.e. in Australia we have laws around "Director Duties" where as a director can be held liable for all kinds of behaviour when it reaches a certain scale incl. honesty, debt, insider trading etc.)

yashap 5y ago

IMO it’d be great if going public meant that you had to publish open, online, real(ish)-time dashboards of your company’s core metrics. Like if it’s a metric in every quarterly report, it goes in the public dashboard, and has to be no more than X stale (1 hour? 1 day? Something like that). Many public companies already have something like this internally, it’s just really locked down. Open it up and most insider trading goes away.

judge2020 5y ago
I'm no financial expert, but it seems this would uber-stabilize the stock since algorithms (ingesting via scraping or human data entry) would trade near-perfectly based on the statistics, leaving little speculation for retail investors/other impulse trades.
- andruby 5y ago
  Until there is a “fluke” in the data. A bug, or an exceptional change. Things that would normally be corrected in the manual GAAP process before reporting. But now all the algorithms crash or bubble the stock price and a lot of people loose money. I’d love to see such (near-)realtime metrics though
- skybrian 5y ago
  No, because even assuming an efficient market, future earnings are still uncertain, people will have different opinions about them, and that's most of the ballgame.
- bwilliams18 5y ago
  That assumes that everyone, and every algo would take those metrics and translate and interpret them into a consistent share price. The value of any company, is only loosely linked to it's performance at any given point in time, and is highly dependent on assumptions (eg. rev. vs. cost growth) over time. This would reduce the information disparity between insiders and the market, there's still plenty of room for speculation.
toast0 5y ago
There's a lot of work that goes into verifying the numbers before they're reported, and you really can't do that on an hourly basis, and a daily basis would really be pushing it. Generally Accepted Accounting Principles aren't always entirely straightforward to apply; you can't just look at the bank balance every day, and internal dashboards don't have the same rigor that reported data must have.
- 5y ago

yibg 5y ago

I don't think this was a leak from the QBR. The QBR goes into a lot more detail around finances etc. Sounded like this case the person was just trading off of subscriber data, which has other sources besides the QBR.

p2t2p 5y ago

They are not the company that does it. My company does it but they the trading tool they provide you for multiple weeks around the event.

ralusek 5y ago

Is this the chaos monkey equivalent of their financials?

dheera 5y ago

> The financial world sees this as reckless. And why should we care what some old farts at Wall Street think? They can run their company however they see fit.