I have all my money under a mattress in fear of a debt ceiling collapse, and people are buying stock because they think an S-1 means the company has started trading.
Let’s rewind: Twitter has filed to go public. Its stock symbol, when it commences trading, will be TWTR. Another firm, Tweeter Home Entertainment Group, which is out of business following bankruptcy in 2007, currently trades as TWTRQ. You can see where this is going.
Blitzed with excitement about Twitter’s impending IPO, folks managed to think that TWTRQ was TWTR itself, or that Tweeter was Twitter if you prefer, and bought the living hell out of its stock.
The price should have been an early warning sign: TWTRQ is a penny stock, trading at less than a cent per share at the end of Thursday, hours before Twitter released its S-1 document. Today, the stock lost its collective marbles and managed to peak at $0.15 per share.
That’s a high price for a dead company. The simple explanation is that there are enough farking moronic retail investors in the world who, in their delirium to buy Twitter shares, managed to convince themselves that the defunct, penny-per-share firm that had a similar name and ticker symbol was the real deal. All before Twitter actually is even public.
This bodes well for Twitter. If there is this much dumb money stoked for its flotation, it could be set for a very strong first day of trading indeed.
The question that rested on the markets following Twitter’s S-1 was simple: Would investors, both institutional and recreational, bite? The answer, at least partially, is yes.
Trading of TWTRQ was halted. TechCrunch boss Alexia claims that she is shorting it. That’s just free money.
The kicker is this: People who invest are often no smarter than your neighbor, the one who can’t keep his dog inside. And that horde apparently has its eyes on the little social service that could. Twitter’s accelerating losses are apparently no cause to fret to those who can self delude into bouncing a penny stock 1,400 percent in a day by accident.
Top Image Credit: mkhmarketing