The stock market literally makes no sense. Look at these two headlines.
Last week, it was reported around 20M Americans lost their jobs, almost every business was shut down and somehow the stock market had its best week since 1938.
Every hotel under the Wynn Resorts Ltd. was closed last week. They brought in $0 in revenue and lost millions (if not hundreds of millions) in employee salaries, rent, overhead, etc. People aren't traveling now and wont travel in the near future. No one is staying at these hotels now or anytime soon. This stock should be going down right? Wrong. The stock went up 50% LAST WEEK ALONE.
But wait, it gets crazier! Zoom showed exponential growth during quarantine, growing from 10M to 200M users in a little over a month. Their stock is up around 100%, which makes some sense.
Now the crazy part...
If you invested in Zoom (Ticker: ZM), the real video chat service, a month ago you would have been up 100%, which seems like a huge win. You could have turned $10,000 into $20,000 in a month!
If you invested in Zoom Technologies (Ticker: Zoom), some random company that makes cell phone parts, you could have been up 1800%, which is a way bigger win. You could have turned $10,000 into about $200,000 in a month!
What happened? Idiots started buying Zoom Technologies (Ticker: Zoom) instead of Zoom (Ticker: ZM) because they are lazy and/or dumb.
Zoom Technologies (Ticker: Zoom) was a very small company that didn't have a ton of shares outstanding. A bunch of morons started buying Zoom Technologies (Ticker: Zoom), so the demand increased and the supply decreased. Econ 101 taught us when supply goes down and demand goes up, price goes up. It got so bad that the SEC (the federal government agency responsible for protecting investors, maintaining fair and orderly functioning of the securities markets) had to remove Zoom Technologies (Ticker: Zoom) from the stock market.
Classic mixup, but this isn't the first time!
Twitter IPO'ed in 2013, dummies bought Tweeter Home Entertainment (TWTRQ) and that stock increased by 1,500% in one day.
Here is a live look of me day trading everyday:
Taylor Offer is a serial entrepreneur and the founder of FEAT, Taylor Parker Agency and My Last Bottle.