Which Zoom? Mistaken-Identity Trades Send Tiny Stock Up 70,000%
Which Zoom? Mistaken-Identity Trades Send Tiny Stock Up 70,000%
(Bloomberg) -- Zoom is surging. No, not that Zoom.
Zoom Technologies Inc., a Beijing-based maker of mobile phone components whose shares traded for less than 1 cent each just two months ago, has soared more than 70,000 percent since March 12. The catalyst? Who knows, but confusion spurred by the trading debut of a much bigger company, Zoom Video Communications Inc., is one very plausible explanation.
Trading in Zoom Technologies picked up in mid-March, right about the time Zoom Video, a software company that reportedly drew interest from Microsoft Corp., filed its registration for a public offering. The interest and confusion pushed the over-the-counter stock as high as $5.76 per share, or to a market value of about $17 million. Average trading volume in the past month has surged to nearly 75,000 shares, or 24 times the average of 3,000 shares that were traded in 2018.
Compare that to Thursday’s debut of Zoom Video, whose market cap surpassed $16 billion, with more than 13 million shares traded in the first 30 minutes after it opened. The stock gained as much as 83 percent over the $36 IPO price set Wednesday.
The mix up was enough to concern regulators. The OTC Markets Group Thursday designated Zoom Technologies as “caveat emptor”, and cautioned traders to be aware of the potential confusion between the “unrelated entities”, the exchange wrote in a statement. Zoom Technologies trades under the symbol "ZOOM," while Zoom Video trades as "ZM."
To contact the reporter on this story: Courtney Dentch in New York at cdentch1@bloomberg.net
To contact the editors responsible for this story: Chris Nagi at chrisnagi@bloomberg.net, Drew Singer
©2019 Bloomberg L.P.