Investments in a hurry: 3 stories about investing the "wrong way"

Sometimes a mistake decides the fate of millions of dollars. For example, on the American Stock Exchange, investors may confuse the names of companies and accidentally invest in businesses with a similar name. It sounds silly, but there have been several such situations over the past 6 years, and we'll tell you about three of them today.

Tweeter instead of Twitter
In the autumn of 2013, representatives of the social networking service Twitter announced the company's IPO on New York Stock Exchange. Planning to attract $1 billion, the company's top managers estimated the total value of Twitter shares as $12.8 billion. The created hype clouded the judgement of the investors who did not finish reading the announcement saying that the initial placement of shares was only planned. They rushed to buy securities, and found a worthy object: the shares of Tweeter - a bankrupt chain of electronics stores - which at that time were traded on the OTC market at a price of $0.007 per share. A similar ticker symbol TWTRQ and a name that sounds similar played a cruel joke with the hasty investors: on October 4, 2013, they bought 14.3 million shares of Tweeter whose price increased 21 times reaching $0.15 per unit. Later, the investors realized their mistake, and by the end of the day, the price fell to 5 cents. The increase in the value of securities was 685% per day. The following month, the original Twitter conducted an IPO selling the shares worth of $1.8 billion. Nobody else invested in Tweeter.

Nestor instead of Nest Labs
When Google announced in January 2014 that it was buying Nest Labs, a developer of smart home electronics, for $3.2 billion, a lot of traders wanted to buy its shares anticipating a price increase. The NEST ticker symbol seemed right to them, and they did not hesitate to buy the securities. Later, it turned out that the purchased shares belonged to a private company called Nestor, a developer of a traffic control system that performed public contracts. The company went bankrupt in 2009 and by that time sold off its assets. The unexpected demand caused the price of Nestor shares to rise by 1,900 %, but they immediately fell back in price. As a result, they were simply removed from the exchange, so as not to confuse investors.

Zoom Technologies instead of Zoom Video
On April 18, 2019, Zoom Video Communications, an American video communications service, conducted an IPO on the NASDAQ Stock Market. The placement price started at $36 reaching $62 by the end of the day; the daily increase was 72 %.
At the same time, the price of Zoom Technologies shares, a small Chinese manufacturer of telecommunications equipment, also began to grow against a background of the news about Zoom Video's IPO. Its quotes peaked by April 15 when the price jumped from $0.005 to $5.5. The growth was 1,100 %, and the company's capitalization was $8 million. Later, the share price fell back to $1.4.
Zoom Video's investors still feel great: the company's securities have risen to $71 since then. However, the share price of the Chinese Zoom Technologies is also not falling: six months later, it is $2.55 per share. The reason for this is the stock ticker symbol ZOOM that investors take for the name Zoom Video, and therefore continue to buy willingly.

It is obvious that such situations only happen to inexperienced investors who are not well informed about the stock market abbreviations. But there is another moral in this story: invest in well-known projects that you have learnt the ropes of: from the team and number of patents to the exact legal name and value of securities.