Tweeter stocks jumped 1500 percent one day after Twitter announced that it would hold an IPO, a great sign for Twitter and a bad one for the investing public. Tweeter went bust six years ago and only exists on paper, owned by Schultze Asset Management, but it sounds like the famous social media giant and has a similar stock ticker, TWTRQ as opposed to TWTR Inc (OTCMKTS:TWTRQ), Reuters reports.
Tweeter and Twitter’s IPO
It’s a funny story, but it’s also a little unnerving that there are so many people out there essentially flying blind. Twitter announced its IPO yesterday, so there’s no chance it would actually be held today. Also, reading the announcement or about the announcement would tell you that not all of the details are even public yet. Also, you can’t just buy stocks from an IPO on the open market. We could keep going like this.
But similar mistakes have happened before, although usually with less famous companies. Years back, Nanometrics, a company that has nothing to do with nanotechnology, got a boost to its stock price when unaffiliated Nanogen released a patent that got some people excited. That means there was a group of investors savvy enough to spot the potential of a nanotechnology patent, but who could be bothered to look up the correct stock ticker.
90’s tech bubble
Going back to the tech bubble in the 90s you can find even more examples, at some point it seemed like any company with an E at the beginning or COM at the end of its ticker got a bump for no apparent reason. Day traders, enthusiastic amateurs with more access to the market than had been possible before, lost a lot of money making bets on stocks they didn’t understand, and that could be about to happen again.
Crowdfunding (not the Kickstarter variety) is here, and some people are really excited about expanding market access to regular people. But the reality is, most people don’t have the training or the tools to manage a portfolio. Technically we don’t know who was responsible for Tweeter going from a penny stock to 15 cents a share, but does anyone think investment banks made this mistake? What’s far more likely is that we just saw a one day bubble driven by novice investors, popped by the media, and indicative of why expanding market access isn’t an inherently good idea.