In a massive, embarrassing misunderstanding, the share price of a small, struggling electronics company — Tweeter Audio and Video — skyrocketed last week, apparently because its stock ticker is similar to Twitter's.
In other words, hordes of buyers mistakenly believed that they were purchasing Twitter shares. Tweeter Audio and Video was once a healthy, nationwide retailer, but has recently fallen on hard times. In 2007, the brand even filed for bankruptcy. Since then, it has barely managed to survive. Then, yesterday, trendy Twitter announced its Initial Public Offering (IPO) under the ticker symbol TWTR. Tweeter Audio and Video possesses a markedly similar symbol: TWTRQ. In the stampede-like rush to buy stock, many fevered investors confused the two brands.
The results were dramatic and remarkable: Tweeter's share price exploded from a mere 1 cent to 15 cents, and the stock rose by a staggering 1,800%.
Sadly, now that the mistake has been reported nationally, it looks almost certain that Tweeter's new-found good fortune will quickly dissipate.
The many investors who did purchase legitimate Twitter stock must be feeling good about themselves right now. However, the joke may be on them eventually. Clearly, Twitter is a "hot" brand now, and its IPO has attracted enormous publicity and interest. Trendiness does not always equate with profitability, though. Twitter executives know this firsthand. The company lost $128 million in 2011, and $80 million the next year. So far this year, it's lost $69 million. Popularity and profitability are different things.