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Buyer's Remorse? OTC Stock Zoom Technologies Zooms Higher Amid Potential Buyer Confusion

Wayne Duggan

Zoom Technologies Inc (OTC: ZOOM) traded higher by as much as 120 percent Thursday morning after popular video and audio platform Zoom Video Communications Inc (NASDAQ: ZM) held its highly anticipated IPO. The only problem? Zoom Technologies has nothing to do with Zoom Video Communications or the IPO.

How It Happens

Web-reading bots have made traders millions of dollars in profits in recent years. These automated programs scan newswires and social media sites looking for market-moving headlines and then automatically trade stocks and options based on the sentiment of those headlines.

Ideally, traders end up making serious bank by beating other traders to the trade.

Sometimes the bots get it wrong, however, particularly when it comes to identifying the correct stock to trade.

Cases Of Mistaken Identity

Back in 2014, Facebook Inc (NASDAQ: FB) acquired virtual reality technology company Oculus VR. On the day the deal was announced, shares of Canadian company Oculus VisionTech spiked more than 100 percent when bot traders mistook the identity of the company.

Of course, the stock quickly reversed direction.

Earlier this year, Auris Medical Holding AG (NASDAQ: EARS) traded higher by as much as 30 percent after Johnson & Johnson (NYSE: JNJ) announced a $3.4 billion buyout of a company called Auris Health.

Zoom Vs. Zoom

A similar story likely played out Thursday when shares of Zoom Technologies jumped from Wednesday’s closing price of $2.45 cents to as high as $5.50 in early trading.

Unlike Zoom Technologies, Zoom Video Communications is a potential competitor to video conferencing software, such as Skype and Google Meet. Zoom has estimated market demand for its Zoom Video at $43.1 billion by 2022.

Once traders identified the correct company involved in the deal, shares of Zoom Technologies plummeted and are up "only" 46 percent at time of publication.

Related Links:

Penny Stock Auris Medical Spikes On Case Of Mistaken Identity

10 Painful Mistakes New Traders Make

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