On March 6, 2019, Zoom Technologies (ZOOM) traded at less than a penny with barely any volume. By April 16, 2019, it exploded to $6 a share with 996,163 shares traded.
But the company didn’t do anything.
It didn’t sign a big deal. It did report earnings growth that blew estimates out of the water.
What happened was far more ridiculous. Investors confused it with the latest IPO, Zoom Video Communications (ZM), which IPO’d over the last few days. They thought that by buying a stock that’s been on the market for years with no revenue, by the way, they were jumping on any IPO before it even had a chance to be traded on the market.
Zoom Technologies is a tiny Chinese wireless communications company that doesn’t even have big operations. It has just 10 employees. They were probably more surprised than any one. In addition, Zoom Technologies has a whopping market cap of just $14 million, and started 2019 at a penny a share.
At $5.50 a share, all of a sudden, this tiny stock was up 47,000%.
It’s further proof that before you buy a stock, make sure you do your due diligence. It’s also further proof there are far too many trigger-happy investors. For confusion and lack of research to lead investors to buy Zoom Technologies, thinking they were buying the Zoom IPO is a bit ridiculous.