Twitter Look-Alike Ticker Triggers 685% Advance in Penny Stock

Twitter Look-Alike Ticker Triggers 685% Advance in Penny Stock

Oct. 4 (Bloomberg) — Tweeter Home Entertainment Group Inc., the once-bankrupt home-entertainment retailer, surged 685 percent before trading was halted as traders confused the company with the microblogging service Twitter Inc. The Canton, Massachusetts-based company trades over the counter under the ticker TWTRQ. Twitter, which filed for an initial share sale yesterday, will list under the ticker TWTR. Trading of Tweeter was halted at 12:42 p.m. New York time by the Financial Industry Regulatory Authority Inc. The stock rallied to as much as 15 cents, before trimming its gain to 5 cents. More than 14.3 million Tweeter shares changed hands today, the most since 2007 and an amount representing less than $1 million of trading, according to data compiled by Bloomberg.“Somebody probably got confused ahead of the Twitter IPO and either misspelled the name of the company or mistyped the ticker by adding a Q at the end,” Larry Peruzzi, senior equity trader at Cabrera Capital Markets LLC in Boston said by phone. “The stocks like Tweeter and Lehman Brothers are out there and are completely unregulated where somebody can just buy a few thousand shares and it’s off to the races.”

Trading with Tweeter was temporarily halted as it demonstrated a misunderstanding related to the possible IPO of an unrelated security, causing a “major disruption” to the marketplace, Finra said in a statement posted on its website. Finra will notify the market when trading may resume, it said.

In the most anticipated technology offering since Facebook Inc., San Francisco-based Twitter made public its S-1 prospectus yesterday and said it’s seeking to raise $1 billion. Twitter pegged the fair value of its common stock at $20.62 a share in August.

To contact the reporter on this story: Matthew Kanterman in New York at mkanterman2@bloomberg.net

 

Tweet This Ticker About Tweeter’s Twitter Ticker

In case you missed it (or ICYMI, if you speak Twitter) there is a tiny, once-bankrupt company called Tweeter Home Entertainment Group Inc. that saw its shares rocket 684 percent today because traders confused it with Twitter Inc., which yesterday filed the registration statement for its initial public offering.

Tweeter trades over the counter under the ticker TWTRQ. It used to trade under the ticker TWTR, which is the same symbol that Twitter will use. Trading of Tweeter was halted at 12:42 p.m., according to the OTC Bulletin Board. The stock had risen as much as 2,200 percent to 15 cents.

I have a hunch about how some of the confusion began because I experienced it firsthand this morning. When I went to the Securities and Exchange Commission’s website to look up Twitter’s filing, I typed TWTR in the “Fast Search” box where it tells you to enter a company’s ticker symbol. That directed me to a page that had links to all of Tweeter Home Entertainment’s filings, the most recent of which was from May 2008.

After seeing that, I clicked back to the previous page and looked up Twitter’s filings by typing the company’s name into a different search box, which is how I eventually got the registration statement. A similar thing happened later today when I entered the ticker TWTR on the Nasdaq Stock Market’s website: It directed me to a page with information about Tweeter.

It didn’t dawn on me that the confusion might be a profit opportunity for speculators. Looking back, my guess is there are other people who visited the SEC or Nasdaq websites, saw the same thing I did and (unlike me) put in a buy order for Tweeter shares, hoping to flip them for a quick buck because they could foresee what would happen. It’s a dangerous game. There are plenty of people who love to play it.

(Jonathan Weil is a Bloomberg View columnist. Follow him on Twitter.)

Tweeter Home shares explode on apparent Twitter mix-up

12:59pm EDT

By Chuck Mikolajczak

NEW YORK (Reuters) – Excitement for Twitter’s coming IPO is running pretty high – so much so that some investors on Friday mistook the nearly worthless stock of long-dead electronics retailer Tweeter for the “tweeting” site, sending shares up more than 1,000 percent.

Tweeter Home Entertainment Group, a specialty consumer electronics company that went bankrupt in 2007, saw a its most active day of trading in more than six years even though it has nothing to do with the social media site.

The stock, which trades over the counter, closed Thursday at a price of less than a penny a share, and Friday hit a high of 15 cents a share on Friday, before paring gains to trade at 5 cents, a 669 percent rise. More than 11.7 million shares had traded by midday.

The volume was the most active trading day for the company since May 10, 2007, when 13.05 million shares were traded and the company reported quarterly results and said it may choose to file Chapter 11 bankruptcy.

To say the stock is lightly traded in normal times is an understatement, sometimes going several days without even trading 1,000 shares over the course of a full session.

However, in the last two weeks Tweeter shares’ price and volume ticked higher following Twitter’s announcement on September 12 that it had confidentially filed for an initial public offering.

The moves on those days were not nearly as extreme, with the stock reaching a high of 3.5 cents, and seeing volume between 200,000 and 1.1 million shares, depending on the day.

Tweeter filed for bankruptcy in June of 2007 and its assets were acquired by Schultze Asset Management on July 13, 2007, according to a filing with the U.S. Securities and Exchange Commission. A representative for Schultze Asset was not immediately available for comment.

Twitter Inc publicly filed its IPO documents on Thursday, setting the stage for one of the most-anticipated debuts in over a year.

 

Twitter reveals rip-roaring growth, big losses ahead of IPO

2:23pm EDT

By Gerry Shih and Alexei Oreskovic

SAN FRANCISCO (Reuters) – Twitter Inc, racing toward the largest Silicon Valley IPO since Facebook Inc’s 2012 coming-out party, hopes to woo investors with rip-roaring revenue growth despite having posted big losses over the past three years.

The eight-year-old online messaging service gave potential investors their first glance at its financials on Thursday when it publicly filed its IPO documents, setting the stage for one of the most-anticipated debuts in over a year.

Twitter’s debut will be the culmination of its journey from a side-project to a sociocultural phenomenon, one that has become a communications channel for everyone from the Pope to President Barack Obama. Last month, Iranian President Hassan Rouhani used Twitter to disclose a “historic” phone conversation with the U.S. President.

The service’s emphasis on real-time communication – whether it be about breaking news or chatting with friends about a TV show on air – sets it apart from rivals such as Facebook.

Now, though, the company must prove to Wall Street it can continue to make money, even as growth slows after a period of explosive expansion around the world.

In Thursday’s filing, the first public disclosure of financial figures, Twitter reported that revenue almost tripled to $316.9 million in 2012. In the first half of 2013, it posted revenue of $253.6 million but had a loss of $69.3 million.

The numbers were mostly in line with the estimates of outside analysts. The company began selling advertising in earnest only in 2010, devising a means for ads to appear in the message streams of users that has proven effective for both desktop computers and mobile devices.

The losses are “a non-issue,” said Brian Wieser, analyst at Pivotal Research Group. “It would have been a surprise if they had a profit.”

In the laundry list of risk factors that’s typically appended to all company IPO filings, Twitter warned it was heavily reliant on advertising revenue. It said more than 87 percent of its revenue came from advertising in the first half of 2013.

The prices Twitter can command for ads has actually fallen over the past five quarters. But the company said that decline was the result of a conscious effort to rapidly expand its available inventory and change its algorithms to distribute ads more frequently throughout each day.

Revenue has risen because the strategy attracted more advertisers, especially small- and medium-sized businesses and international clients, it said.

Still, the company acknowledged the uncertainty of the volatile and highly competitive online advertising market.

“Advertisers will not continue to do business with us, or they will reduce the prices they are willing to pay to advertise with us, if we do not deliver ads in an effective manner, or if they do not believe that their investment in advertising with us will generate a competitive return relative to alternatives, including online, mobile.”

CULMINATION

Twitter’s target is to raise $1 billion, a figure devised mainly for registration purposes and that will change as the company embarks on a roadshow to sell its IPO to investors.

Assuming everything goes smoothly, it could begin trading in November, though it has not revealed which U.S. exchange — the New York Stock Exchange or the Nasdaq — it has chosen.

Wherever it lists, its debut is likely to cause waves across Wall Street and the industry, potentially breathing new life into the market for consumer Internet companies and influencing the value of all social media companies.

Some analysts estimate Twitter could be worth as much as $15 billion. That’s a fraction what Facebook was worth at the time of its debut, but Twitter’s profile is just as high.

Indeed, its more established rival is borrowing a few pages from Twitter’s book, particularly in its approach to mobile advertising. On Thursday it announced an advertising initiative for its Instagram unit, which competes most directly with Twitter.

Since Twitter was spun out of a struggling San Francisco startup in 2006, it has grown to approximately 2,000 employees based in 15 offices around the world. Along the way, it helped create new ways for advertisers and corporations to reach audiences, from a “promoted tweets” model now replicated by Facebook and other Internet platforms, to its “second screen” approach to encouraging real-time debate around television programs.

More importantly, it has helped redefine the nature of global communications, linking once lofty and unreachable politicians, celebrities and journalists with millions around the world.

Its staunch advocacy of free speech around the world – nothing other than direct personal threats are barred from Twitter – has helped it become an important avenue through which news and viewpoints are shared, from the first inklings of the U.S. military assault on Osama bin Laden’s compound to Obama’s tweeting “Four more years” when he won re-election.

Twitter’s IPO has already drawn multiple comparisons to Facebook. When the world’s largest social network debuted, concerns centered around its inability to fully earn revenue off mobile users.

Twitter appears to have less of an issue with mobile. About 65 percent of its revenue derives from mobile users, it said.

The service had 218.3 million monthly active users, on average, in the three months ended June 30. Three-quarters of its monthly active users are considered mobile users, it said in the filing.

But Twitter managed only average revenue per user in the second quarter of 2013 of 64 cents compared to Facebook’s roughly $1.60, according to Reuters’ calculations.

TAKE HEART

Investors can still muster some cheer from Facebook’s revenue and profitability track. The social networking site pulled in $272 million in revenue in 2008 but lost $55 million, according to Facebook’s S-1 document. In 2009, it swung to a profit of $262 million after increasing its revenue nearly three-fold to $777 million. Facebook is now solidly profitable.

Twitter, which went through a period of management turmoil and internal strife in its early years, did not append a letter from the founders to the filing, unlike Internet companies such as Facebook and Google before it.

Co-founder and former CEO Evan Williams is Twitter’s largest shareholder, with 12 percent of the shares, while co-founder and chairman Jack Dorsey owns 4.9 percent. Biz Williams, another co-founder, does not appear on the list of top shareholders. Current CEO Costolo owns 1.6 percent.

Among institutions, Benchmark and affiliated entities own 6.7 percent of shares, while Rizvi Traverse Management, Spark Capital, Union Square Ventures and DST Global are each shareholders of 5 percent or more.

Suhail Rizvi, the little-known head of Rizvi Traverse who has helped himself and his investors amass stakes in Twitter since 2011, would count among the largest institutional shareholders, according to sources familiar with its investments.

Twitter intends to list common stock under the symbol “TWTR.” Goldman Sachs, Morgan Stanley, JPMorgan, BofA Merrill Lynch, Allen & Co, Deutsche Bank Securities and Code Advisors are managing Twitter’s IPO.

October 4, 2013, 6:08 p.m. ET

Oops! Twitter IPO Frenzy Lifts Defunct Retailer’s Shares by 2200%

Bankrupt Tweeter Home’s ‘TWTRQ’ Ticker Is Similar to ‘TWTR’

MATT JARZEMSKY

The hoopla surrounding the coming initial public offering for Twitter Inc. swept up an unlikely candidate: shares in bankrupt electronics retailer Tweeter Home Entertainment Group Inc. TWTRQ +733.33%

The end result was a trading frenzy Friday that prompted regulators to step in and halt trading in Tweeter’s shares—a penny stock that surged as much as 2200% during the session.

Tweeter filed for Chapter 11 bankruptcy protection twice—in 2007 and 2008—and closed its stores. But it still has shares trading under the symbol TWTRQ, similar to the TWTR that Twitter disclosed late Thursday would be its ticker of choice when it sells shares to the public.

“There are real investors who have probably made a mistake here and probably lost money because of it,” said Adam Mattessich, senior managing director and head of equity trading at Cantor Fitzgerland LP.

Tweeter’s shares aren’t listed on an exchange and instead change hands in the “over the counter” marketplace. The shares rarely trade, and when they do have traded for less than a penny per share.

When Twitter announced in mid-September that it had filed for an IPO there was small flurry of trading in Tweeter stock. But after the filing became public Thursday night, buyers flocked to Tweeter stock.

The source of the confusion stems from the rules governing ticker symbols. When companies file for bankruptcy, the Financial Industry Regulatory Authority, Wall Street’s self-regulatory body, typically appends a letter Q to the existing ticker. That frees up the symbol for potential use by another company.

“Investors mistakenly saw Tweeter as possibly being [Twitter] trading already and the orders flooded into it,” said Cantor’s Mr. Mattessich. “Then it becomes sort of a snowball effect.”

As Tweeter’s stock price rose and volume jumped, professional short-term traders jumped in to take advantage of the move, he said.

By time the trading in Tweeter shares was halted by Finra early Friday afternoon, 14.4 million shares had changed hands, a daily record for the stock. At that point in the day, more Tweeter shares had traded than in all but six stocks in the S&P 500-stock index.

During the trading frenzy, Tweeter’s share price surged from 0.07 cent to as high as 15 cents, according to FactSet. But by the time trading was halted, the stock had fallen all the way back to 5 cents.

In a statement announcing the halt of trading, Finra said the activity “demonstrated a widespread misunderstanding related to the possible initial public offering of an unrelated security, which … has caused a major disruption in the marketplace.” Finra’s actions didn’t invalidate trades.