The story of a tiny technology company whose stock has soared more than 50,000% over the past month would, at first glance, seem like an astounding story.
The only problem is that the outfit in question, Zoom Technologies Inc. (ZOOM hasn’t released any revenue numbers in nearly a decade.
In fact, the Beijing-based developer of electronic components for mobile phones, which has all of 10 employees, has petitioned the SEC for permission to go private and end its tenure as public company.
But while it may not be a rags-to-riches story, the meteoric rise of Zoom Technologies’ stock from .005 cents a share about a month ago to as high as $6 on Thursday may have an equally intriguing explanation — a massive case of mistaken identity.
Apparently, some investors have mistaken Zoom Technologies with Zoom Video Communications (ZM , the fast-growing videoconferencing company that had a spectacular debut on Nasdaq on Thursday, with shares opening 81% above its initial offering price of $36. The confusion is perhaps more understandable given that the much smaller Zoom Technologies trades under the symbol ZOOM and has a very similar name.
Trading patterns would appear to bolster the mistaken-identity theory, with ZOOM’s incredible rise coinciding with interest in ZM’s IPO. Zoom Video filed to go public in March, and as it got closer to debuting at the end of that month, shares of Zoom Technologies began their rapid rise from almost zero.
After Zoom Video Communications’ initial offering was priced at $36 on Wednesday evening, shares of Zoom Technologies shot up again, this time nearly doubling to $5 a share.
It’s not clear if Zoom Technologies’ erstwhile investors have finally caught onto the fact that they bought the wrong stock.
Regardless, Zoom Technologies stock price gave back most of its gains by the end of the day Thursday, dropping back to $2.91, for an 18% gain for the day.
For a stock that at one point rocketed more than 50,000%, that gain is small potatoes.
Even so, Zoom Technologies is still up roughly 24,400% over the past month.