You are watching the market, but make sure to keep a look out on what company you are actually investing in. While it seems like a silly mistake that would not happen often, it really does happen all the time. Don’t believe us? Here are a few instances where investors mixed up company names in a big way:
Snapchat Inc. vs. Snap Interactive
By now, it is a fairly safe assumption that you have been exposed to, or at least heard of, Snapchat. The social media powerhouse recently filed for a $3 billion initial public offering that could be the largest IPO for a United States tech company in quite some time. In doing so, Snapchat Inc. has caught the attention of A TON of investors. However, by mishap, so has Snap Interactive. Ever hear of it? Probably not. Snap Interactive is best known for creating a semi-successful dating app which is (arguably) far less known than Snapchat. But, it’s seen a big increase in popularity in the last week. In fact, during the four days following Snapchat’s IPO announcement, overeager and less than cautious investors mistook Snap Interactive for Snapchat in a classic identity mix-up. The result of these numerous name mix-ups was a 164% increase in Snap Interactive’s stock price!
Twitter vs. Tweeter
In 2013, similar chaos ensued with the announcement of Twitter’s initial public offering. The problem? Twitter (TWTR), the social media company with more than 200 million users (in 2013) was expecting to raise roughly $1 billion by going public. Meanwhile, the now disbanded company, Tweeter Home Entertainment Group Inc., held TWTRQ as its stock symbol. As a result, Tweeter, a penny stock, grew more than 1,000% in only 24 hours. Incredibly, within a day, Tweeter shares went from less than a penny to a high of 15 cents and more than 14.3 million shares had been traded by midday, as investors believed they were investing in Twitter. Eventually, Tweeter was forced to change its stock symbol to THEGQ because of all of this confusion. Ultimately, however, the TWTRQ security boom demonstrated a widespread misunderstanding regarding initial public offerings and unrelated companies with similar names.
Oculus VR vs. Oculus Vision Tech Inc.
Unsurprisingly, in 2014, when Facebook acquired Oculus VR, a virtual reality headset maker, for $2 billion, the deal made waves in Silicon Valley. More surprisingly, however, Facebook’s huge acquisition also had a significant impact on a completely unrelated company: Oculus Vision Tech Inc. In fact, the shares of Oculus Vision, the relatively small company based in Vancouver that assists businesses in putting digital watermarks on video transmissions, surged 155% in a single day. Consequently, the trading confusion got so out of hand that Oculus Vision Tech Inc. was forced to stop all trading and send out a press release in order to clarify that it had not been involved in the Facebook deal. The mishap proved to be quite a headache for both investors and Oculus Vision Tech Inc.
Active investing is often extremely exciting. This is especially true when you discover an opportunity that looks like it could pay off in a big way – such as the result of an acquisition or an IPO. However, consider being cautious of deals that seem “too good to be true.” Based on the above they could be. Enthusiasm with regard to trading is a key trait of a good investor, but staying responsible through the use of basic research could make you a great investor.