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Why Has Signal Advance Stock Soared More Than 6000%?

Elon Musk has opened a can of worms once more through his usual Twitter antics as he sent his adoring fans to the wrong Signal.

What has happened to Signal Advance (OTCMKTS: SIGL) stock this week is proof of two things:

  1. The power of social media influence can never be underestimated. 
  2. Tesla has a die-hard, cult-like, ride-or-die army of loyalist supporters because of Elon Musk, not in spite of him. 

You can be forgiven for never having heard of Signal Advance, a micro-cap technology stock that is traded over the counter, nobody else had heard of it until recently either.

However, because of Elon Musk, its stock has soared more than 6,000% since Thursday…

Did Elon Musk become CEO or something?

Nope, he simply tweeted “Use signal”, and he wasn’t even talking about Signal Advance…

What good ol’ Elon was really referring to when he sent this tweet was the Signal encrypted messaging app, which is funded by a nonprofit organization. Naturally, Musk’s legions of followers dove blindly into what appeared to be a stock recommendation. By the end of the day, Signal Advance Inc. shares had surged more than sixfold.  Even though the confusion was cleared up on Friday, there was no stopping the buying frenzy, which was enough to push Signal Advance’s rally to 6,350% in three trading days, giving it a market valuation of $390 million.

Even Signal CEO, Dr. Chris Hymel, knew that this was bad, releasing a statement on Monday saying:

“We strongly recommend people do their due diligence and always invest with care.”

There is no logic behind any of this, just blind investment thanks to the misconceived words of one man. Signal Advance stock saw its highest trading volume since going public in 2014 on Monday; more than 2 million shares changed hands, compared to January 4, where not a single share of the stock was traded. The company, which reported making no revenue in 2015 and 2016, hasn’t filed with the SEC in almost 2 years and is now worth more than $3.5 billion.

This is not the first example of such an occurrence. The popularity of Zoom Video Communications in recent years resulted in brief surges in the shares of Zoom Technologies Inc. after traders confused its ticker symbol ZOOM with that of the video-conferencing company. The Beijing-based maker of mobile phone components later changed its ticker to ZTNO.

It goes without saying that investors should really know a lot more about a company they’re willing to invest their hard-earned cash in, rather than just blindly following the word of the planet’s greatest meme-lord. 

I would like to say that a lesson has been learned here, but somehow, I doubt it…

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MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here