It is a case of mixed signals.
Confused traders caused the stock price of an obscure medical device company to rise more than 400% in a day after Elon Musk encouraged them to use a messaging app with the same name.
The bizarre rally started after billionaire boss Tesla told his 42 million followers on Twitter to “Use Signal” on Thursday, apparently referring to the mobile app that allows users to exchange encrypted messages.
But investors bought shares in Signal Advance Inc., a small Texas-based company that makes devices used to detect various health problems.
The company’s stock, traded over the counter, skyrocketed from 60 cents the day before to $ 3.76 on the day of Musk’s tweet. The stock almost doubled to $ 7.19 on Friday and then shot up 438% to $ 38.70 on Monday, despite news of the apparent ticker confusion.
Signal Advance did not immediately respond to a request for comment Tuesday morning. But CEO Chris Hymel told Bloomberg News that the company “strongly recommends[s] people do their due diligence and always invest carefully ”.
Investors who want to buy shares in the Signal app are out of luck – it is owned by the Signal Foundation, a nearly three-year non-profit organization.
The app has boomed in recent days, since rival WhatsApp released an update to its privacy policy that allows it to share user data with Facebook, its parent company.
About 810,000 users worldwide installed Signal on Sunday, almost 18 times the number seen on January 6, the day of WhatsApp’s privacy change, data from research firm AppTopia show.
Signal warned investors that it “has absolutely nothing to do” with Signal Advance’s shares, as Signal Advance’s share price has exploded.
“It’s understandable that people want to invest in Signal’s record growth, but it’s not us”, the app said on Twitter. “We are an independent 501c3 and our only investment is in your privacy.”
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