Is this a case of mistaken trading or traders taking advantage of stupidity?
Recently, Zoom Video Communications filed an initial public offering (IPO) of $36 and it surged 72 percent to just under $62 a share. But there was another Zoom that benefited from the buzz: Zoom Technologies, an over the counter penny stock.
Over the last 30 days, Zoom Technologies had a meteoric ascent of 56,000 percent. Nope. That’s not a typo: 56,000 percent.
The telecommunications firm was trading below a penny just a month ago, but it soared to as high as $5 this week.
What happened? One of two scenarios:
The first is retail traders and perhaps even professional stockbrokers got mixed up by the companies. The second is that traders would realize that people would mix up the tickers and took advantage of this mistake.
It’s probably a bit of both.
But imagine holding Zoom stock for a penny and seeing it surge as high as it did. You’d be rich – on paper, only. Would there have been a market to buy $5 in Zoom stock when it was worth penny only recently? Doubtful.
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