It's fair to say Zoom has had a big few months. Its user base has increased twenty-fold, and share price has more than doubled, as it has become become the go to communications tool for millions of us at home. But, there's been another beneficiary of its success as well... enter Zoom Technologies, a tiny company with absolutely no affiliation to the video conferencing company you're familiar with.
Sometimes it's better to be lucky than smart...
It seems as though some people who thought they were investing in Zoom Communications (the real one) were actually buying Zoom Technologies (the other one) by accident. Those mistakes pumped the share price of the wrong Zoom up by 1800% at one point -- a tidy return to anyone who made the mistake early and benefited from others doing the same later.
To try and minimize the confusion and protect investors the SEC actually had to suspend trading in Zoom Technologies for a brief period.
Fool me once, shame on you. Fool me twice…
This isn’t even the first time this has happened. When Zoom Communications went public in April 2019, uninformed investors also poured money into Zoom Technologies, which saw its share price go from less than a cent to almost $6 in about a month.
Do these mistakes happen often on Wall Street?
Surprisingly... yes. Similar looking tickers have misled other investors in the past. When Twitter (TWTR) went public in 2013, investors bought Tweeter Home Entertainment (TWTRQ) which on one day increased by 1,500%. And in 2017 when Snapchat (SNAP) went public, the stock price of Snap Iterative soared 164%.
