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Twitter IPO Confusion Sparks Massive Penny Stock Rally

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Twitter IPO logoOn Friday we wrote an update  about the Twitter IPO being the most anticipated upcoming IPO.  Activity across various websites and media has caused a massive amount of buzz to form.  Sites like Google Finance began to setup quotes for TWTR, the anticipated future stock symbol for Twitter.  Investors however appeared to confuse a bankrupt consumer electronics company, Tweeter Home Entertainment Group (TWTRQ) for the Twitter IPO.  Trading on Tweeter opened at $0.007 and climbed to $0.15 (over 1,800% gain) in morning trading before closing at $0.051, over a 684% gain.

Background of Tweeter Home Entertainment company

Tweeter was a specialty consumer electronics store founded in Boston in 1972.  It had more than 100 stores across 18 states, primarily along the east coast.  In 2007 the company ran into financial trouble and entered into Chapter 11 bankruptcy protection.  It was during this period of time that the Tweeter Conpany began trading their shell as TWTRQ on the OTC Pink Sheets.  In 2008, the company filed for a conversion to a Chapter 7 bankruptcy liquidation and shortly after closed its final stores for good.  Readers in the Boston area will probably remember the Tweeter Center, a popular concert venue that has since been renamed to the Comcast Center.  Since then the shell company has continued to trade with almost nonexistent volume as the company has not completed its bankruptcy.

tweeter store

A Former Tweeter Store

How did the mixup happen?

Nobody is quite certain, but what is known is that trade volume on TWTRQ was higher than normal for a few weeks proceeding the wild ride it had on Friday.  This could have been caused by a few savvy investors buying up the dirt cheap stock in hopes there might be a confusion when Twitter’s filing news went viral.  If so, the strategy certainly worked until FINRA froze trading at 12:42PM Friday for an “extraordinary event”.   If investors managed to trade out the stock before trading froze it’s entirely possible they could have left with over 1000% gains.  Of course it could have just been novice investors hoping to jump into a Twitter IPO that hadn’t actually begun yet.

Could this be a strategy?

Twitter’s upcoming IPO is an extraordinarily hyped IPO for one of the world’s largest social networks and conveyors of information.  Small companies and investors have been known to register domain names and phone numbers that resemble very closely large and easily recognizable companies in hopes that a potential customer might mistype or misdial their address.  Penny stocks are very inexpensive and in the case of a penny stock closely resembling Twitter’s future stock symbol, leave potential for viral activity spilling over to create accidental trade activity.  I wouldn’t call trading like this a strategy.  It’s a bit like buying a lottery ticket that will likely have no value but could produce massive returns if the conditions are just right.

What Lies Ahead

We expect that there will be much more news to cover related to this.  The Facebook IPO was chaotic and a great deal of controversy broke out when it began trading.  Only time will tell if Twitter’s IPO succeeds where Facebook’s failed.  This kind of market behavior could start to happen with other smaller IPO’s.  We’re in a very exiting time to trade the markets.

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One Response to “Twitter IPO Confusion Sparks Massive Penny Stock Rally”

  1. chitra says:

    Waiting for seeing the twitter IPO movement in future trade.


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