When they say you should never let a good crisis go to waste, it’s politicians and investors who often take the advice to heart. So when the novel coronavirus and the disease it causes, COVID-19, became a threat to the global economy, savvy investors looked for companies to buy while most stocks tanked.
So who could profit from a contagious, not-yet-understood, deadly virus? Many investors concluded the virus would be a boon to companies that help people stay in their homes.
If quarantines spread wider and wider, their thinking went, more and more companies will move toward telecommuting and seek the services of videoconferencing companies. One of the most prominent of such companies is Zoom. In the two weeks following the Nasdaq composite’s peak on Feb. 19, Zoom Video Communications gained roughly 13%. In the same time frame, the Nasdaq dropped about 13%.
There’s just one problem. The stock ticker for Zoom Video Communications isn’t ZOOM. It’s ZM. Many eager (but apparently not savvy) investors went after the wrong company and bought stock in ZOOM, which is Zoom Technologies, not Zoom Video Communications. Its stock went soaring too.
Unfortunately for those investors, not only is Zoom Technologies not a video communications company, but it’s also defunct.
Zoom Technologies hasn’t reported revenue since 2011. No one knows who owns the stock or why it’s still being traded. But someone, somewhere, who already owned ZOOM, suddenly found his or her otherwise worthless stock in high demand.
This isn’t even the first time Zoom Technologies has benefited from the confusion. When Zoom Video Communications first went public in April 2019, confused investors sent Zoom Technologies soaring from nearly zero to $5.76 a share.
Stock prices change every nanosecond. But no matter how big the crisis or how fast prices zoom around, investors should still take 60 seconds to double-check and make sure they have the right company before they buy.
