A Stock Called ‘TWTRQ’ Was Up Nearly 700% Because People Thought It Was Twitter
Online social networking and microblogging company Twitter announced yesterday that it is filing for an initial public offering (IPO), and would use the symbol TWTR to trade on the stock exchange. Shares are expected to start trading sometimes this year. But even before that, the hoopla surrounding its upcoming IPO swept up an unlikely candidate today: bankrupt electronics retailer Tweeter Home Entertainment Group Inc., whose stock ticker happens to be TWTRQ.
In U.S. stock exchange, the letter ‘Q’ is added to a stock ticker whose company has filed for bankruptcy, that frees up the symbol for potential use by another company. Tweeter Home Entertainment (TWTRQ) was a consumer electronics retailer that sold TVs, car radios, home theater systems, and the likes at more than 100 U.S. stores. In 2007 it filed for Chapter 11 bankruptcy protection and had its assets sold to a new owner. With an opening price of $0.006, the stock rallied to as much as $0.15, before trimming its gain to $0.05. More than 14.3 million Tweeter shares changed hands today, the most since 2007 with an amount representing less than $1 million of trading, according to data compiled by Bloomberg.
By now, trading with Tweeter shares was temporarily halted as it demonstrated a misunderstanding related to the possible IPO of an unrelated security, causing a “major disruption” to the marketplace, according to the Financial Industry Regulatory Authority (FINRA). “There are real investors who have probably made a mistake here and probably lost money because of it,” said Adam Mattessich, senior managing director and head of equity trading at Cantor Fitzgerland LP. The trades are not invalidated, and investors who engaged in the trading kept their profits or losses.
Existing shareholders of this company gained as investors thought it was Twitter
“Somebody probably got confused ahead of the Twitter IPO and either misspelled the name of the company or mistyped the ticker by adding a Q at the end,” Larry Peruzzi, senior equity trader at Cabrera Capital Markets LLC in Boston said by phone. “The stocks like bankrupted Tweeter and Lehman Brothers are still out there and are completely unregulated where somebody can just buy a few thousand shares and it’s off to the races.”
Investors aren’t the only ones confused. Google’s ticker page for Tweeter showed the company’s name as TWTR Inc. The page pulled news stories related to Twitter. Tweeter’s stock is what’s known as a “penny stock,” its 52-week low this year was $0.0004. The current price: $0.051. That is nearly a 127 times gain. Tweet that.
Twitter to list its shares for trade as early as November this year
In the most anticipated technology offering since Facebook Inc., San Francisco-based Twitter made public its S-1 prospectus yesterday and said it’s seeking to raise $1 billion. Twitter pegged the fair value of its common stock at $20.62 a share back in August. The company has not announced on whether it would trade on the New York Stock Exchange or Nasday, but it is guaranteed it would not be on over-the-counter (OTC) exchange, where Tweeter is in.
OTC penny stocks of bankrupt companies are often worthless, but that doesn’t mean that investors fancying themselves riverboat gamblers can’t make money in the space. The former General Motors Liquidation Corp, had several big rallies until its de-listing in 2011 - its value owing exclusively to holding warrants for shares in the “new GM” - and the penny stocks of Fannie Mae and Freddie Mac had a boom then bust earlier this year.