Armed to the teeth with stimulus checks, it certainly does appear that Robinhooders will buy nearly anything and everything in a hastily second, especially if it is prompted by the world’s richest person. Indeed, when the wealthiest man tweets something, it appears that the entire world listens. So much so, that when Musk sent out a Tweet urging his followers to use Signal, an encrypted messaging app, rather than WhatsApp or Facebook Messenger, it sent millions to an unrelated penny stock company, causing it to surge by more than 1,100%.
Last week, WhatsApp announced upcoming changes to its privacy policy which will now require users to share their personal data with parent company Facebook. If users do not comply they will have their account removed from the platform altogether, drawing the ire of numerous users and tech entrepreneurs, including Musk. In an attempt to direct frustrated WhatsApp users to an alternative encrypted messaging platform, Musk sent out a Tweet saying “Use Signal.”
However, in a market that is heavily convoluted with speculators and incoherent Robinhooders, the first thought that came to the entrepreneurs followers’ minds was to pour their money into a company called Signal Advance Inc. The nonprofit firm focuses on the development of applications for emerging technologies, and has been trading below $1 per share for the past five years. As a result, shares of the penny stock soared by more than 1,100% over a span of two days.
Signal Advance stock began trading at around $0.60 on Thursday, but following Musk’s Tweet, the stock soared by nearly 530% by the end of the day, and then surged by another 90% on Friday. Within two days, the penny stock was sitting at around $7.21, increasing its market cap from a mere $55 million to $660 million. However, momentum-chasing Robinhooders have yet to realize that Musk was instead referring to Signal, the encrypted messaging platform – not the non-profit penny stock.
The mixup even prompted Signal to issue a clarification on Twitter, pointing out the apparent mistake. “It’s understandable that people want to invest in Signal’s record growth, but this isn’t us,” the app developers explained. Indeed, this is also not the first time that such an embarrassing mistake on the investor’s part has occurred. Last year market participants panic bought stocks of Zoom Technologies, assuming it was Zoom Video Communications.
Information for this briefing was found via Twitter and Reuters. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
