Following Google’s announcement of its plans to buy Nest Labs for $3.2 billion, investors flocked to their trading desks to scoop up shares of the home automation company in large quantities. The only problem is that Nest Labs is a privately held entity – it doesn’t trade on any stock market exchanges.
Turns out that confused investors were snatching up shares of Nestor, Inc., a traffic enforcement systems company. In an unfortunate case of mistaken identity, traders managed to boost the penny stock’s price by 1,900%. Nestor’s ticker symbol – NEST – is certainly the main culprit for the confusion and is responsible for Nestor stock’s reaching a high of $0.040 on Tuesday. Prior to the Google announcement, Nestor had been hovering around the $0.002 mark since January 2013.
Believe it or not, this isn’t the first time something like this has happened. With the introduction of Twitter’s IPO to the New York Stock Exchange last fall, Tweeter Home Entertainment Group saw its shares spike by 1,000% as traders mistook it for the social media giant. A sharp contrast to Twitter’s current market cap of $33.54B, Tweeter filed for bankruptcy in June 2007 and its assets were acquired by Schultze Asset Management the following month. “Tweeter shares had been listed under the symbol TWTRQ — the Q indicating the company is in bankruptcy,” says Steve Schaefer of Forbes. “That confusion was lifted when Tweeter Entertainment resumed trading under the symbol THEGQ.”
Now the question is: Which penny stock is next to see its price spike by 1,000%? Perhaps, therein lies a Wolf of Wall Street-esque get-rich-quick scheme to capitalize on once the next big IPO is announced. After all, everything turned out just fine for Leonardo DiCaprio. Right?
Here are a few contenders for the next big case of mistaken identity on Wall Street.
Companies it will be mistaken for: Everock, Inc. (EVRN) produces natural veggie spreads and dips. It currently trades at 0.0004.
Will it go public? The location-based social networking site has become a major player in its industry. With 2012 and 2013 being the year of the Facebook and Twitter IPO, respectively, perhaps this year will see Foursquare go public.
Companies it will be mistaken for: 4Licensing Corporation (FOUR), a merchandise licensing company currently trades at 0.6840.
Will it go public? Dropbox, recently valued at $8 billion, has many investors speculating on a 2014 IPO.
Companies it will be mistaken for: Fuse Science, Inc. (DROP) is a consumer electronics company. Its shares are currently trading at 0.0150.
Will it go public? Jack Dorsey’s mobile payment solutions company has been generating a lot of IPO buzz with analysts expecting an announcement from Square later this year.
Companies it will be mistaken for: Stina Resources Ltd. (SQA.V) is a mineral exploration company. It currently trades at 0.1750.