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Bloomberg
How A Penny Stock Explodes From The Dark At 451% Earnings Via Discussion Forums
(Bloomberg) – “Are you still awake?” It was 12:43 p.m. on January 19 and TRGainz, a frequent user of the Stocktwits social media platform, was starting to get excited. It was the same for Alwaysliquid. “I can’t sleep,” he replied a few seconds later. In about nine hours, financial markets would open in New York, and when they do, an obscure stock by the name of Blue Sphere Corp. would suddenly, and seemingly miraculously, skyrocket, offering windfall of around $ 30 million to those who had stocked up in the previous weeks. TRGainz and Alwaysliquid knew what was going to happen and found it difficult to contain their excitement. For days, the chatter on this Stocktwits page and others, such as a bulletin board for Reddit users dedicated to penny stocks, grew steadily on Blue Sphere. The fact that the company had neither a stock exchange listing nor financial disclosures. Recent developments of any kind did not seem to do so. matters to everyone. It was a clean energy business and, with the Democrats taking control of both the White House and Congress, that was enough to make it a salable story to the day-trading masses who had become an unstoppable force in the world. large pandemic stock market rally. .Moneyman223 was a prominent voice throughout, begging the other members to jump in before the stock exploded. “Come in or regret not coming in,” the silver man said in early January 14, a day after another Stocktwits member labeled Blue Sphere as a clear winner of the Democrats’ agenda on climate change. The next day, the last trading session before the long weekend, Moneyman223 again insisted, “not too late for you fools to get in again.” Then a character named byelowsellhi said, “Have a nice weekend for your future millionaires.” Blue Sphere exploded as announced on January 19. At the end of the day, it was up 451%, from six tenths of a cent to over 3 cents. About 2 billion shares were traded that day, a staggering and yet not entirely abnormal volume in a booming new era of penny stock speculation. The discussion board posts arrived swiftly and furiously as the stock skyrocketed: “Amazing day everyone,” “we’re going to be very rich together” and “congratulations to everyone who took the risk and believed in. you !!!!!! ”. Every day, there are a dozen Blue Sphere-like stories or more tiny nonprofits that mysteriously go from obscurity to viral sensation. Lately, the frantic pace of the boom and bust of these subtitles has started to choke off all other forms of speculative mania in the pandemic era market. Call it another moss marker – retail traders in the throes of mass psychosis amid zero commission fees and zero benchmark interest rates – to drop alongside the GameStop Corp. saga, the triple rally of cryptocurrencies, the PSPCs that are minted daily, and “People are starting to look around and think, ‘What else can I do with my money? Said JJ Kinahan, chief market strategist at TD Ameritrade. The rules for trading in OTC securities vary from broker to broker, but they can be purchased on any of TD Ameritrade’s trading platforms for a fee. “He would be one of those at the top of my list to tell people, ‘Please understand the risk you’re taking over there.’ I learned early in life, if there are a lot of advantages, there are a lot of disadvantages. People just might not want to tell you about the drop. For anyone observing from a distance, it is difficult to understand how today’s penny stocks are chosen. How is the critical mass formed around them? The universe of companies that make up over-the-counter trading in America is large and they trade on lightly regulated listing services where information is scarce or nonexistent. Like everything on the Internet, it is almost impossible to find the exact origins. But in trying to locate the spark, these types of message board conversations almost always portend a take-off. And although no one so far attributes unlawful intent to the events unfolding in retailer discussion forums. ‘Today, it’s hard not to note the similarity to the follies of yesteryear, when programs like “pump-and-dump” and “bigger fool” were all the rage. to crack down on get-rich-quick scams, according to CEO Rishi Khanna. “It’s something that we are watching. Now we obviously can’t pay attention to every screen, so we depend on the community to report something that may seem a little weird or awesome, ”Khanna said in an interview. “We’re not going to stop everything – it’s just physically impossible – but we’re doing our best.” Attempts to contact Blue Sphere officials for comment have failed. Emails and voicemail messages left by Bloomberg News have not been answered, and the company has not filed a report with the United States Securities and Exchange Commission for about two years. In the aftermath of the action surge last week, a Stocktwits member with the username WolfeRegalia wrote: “I can’t find any real information. Financial data from the company’s website is confirmed through 2018. Can anyone recommend any leads? Thank you in advance. This is the challenge of saying a real long-term investment in penny stock from a simple pump – when a group of people cram into the same stock at the same time to quickly influence prices. A growing Reddit forum dedicated to penny stock trading recently updated its rules to curb user shilling. The page, r / pennystocks, now has over 430,000 members – “astronauts,” using the site’s nomenclature. This is a 21% increase from the end of December, according to Breakout Point, a data and analytics company that tracks this information. At the top of the r / pennystocks page is a drop-down menu of frequently asked questions. asked. One option reads: “Identify a Pump” and refers to a three-year article titled “How to Find and Use Pumps”. The first step? According to the article, download Stocktwits first, but use your own discretion. “I’m hesitant to tell you this just because I don’t want you to buy into all the hype out there,” the article read. “Remember, don’t trust anyone, especially all the talk on Stocktwits. Most of it is waste. Don’t believe it. Then find a stock that recently went parabolic, do some research to see what people were telling people to buy before the outbreak (that’s the firefighters), track those people, and set up alerts to know when they go “Don’t cross not the line, “the post read. “Now I want to stress the importance here that pumping a stock is illegal. However, investing in a stock that is increasing in price and volume is not. But in closing, “Good luck everyone! May your losses be low and your gains high. “These days there is a lot of hope out there.” The newly created day traders who have been dominant forces in the market – they keep finding other places to go and bring that speculative fervor into the mix, and it looks like penny stocks are the last, ”Liz said. Ann Sonders, Chief Investment Strategist for Charles Schwab. OTC stock trading is available for those with Schwab brokerage accounts. “I don’t have any speculation or knowledge or even guessing on what is starting this but anyway it feeds on itself and since the start of the year is another hot trend. . ” As for Blue Sphere, it looks like the fever hasn’t broken. The stock price almost fell 50% in the first three days after its Jan 19 pop, but on Monday it rose again, ending the day at 2.2 cents, for a gain of 26%. Please visit us at bloomberg.com Subscribe now to stay ahead with the most trusted source of business news. © 2021 Bloomberg LP
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