5 ms·

Meta shares jump on name-change news, but it's a Canadian materials company

48 points by cf100clunk 5y ago

323 5y ago
It's a rational strategy. There are algos which buy stocks with tickers close to well known companies in the news. Especially in these days of meme stock, think about it, the reason to buy $META is meta ... (mind blown)
- noja 5y ago
  Because the algos are crap or on-purpose?
  - dTal 5y ago
    I imagine there's a feedback loop. Inevitably there's going to be at least a few quick-fingered human investors who make the error, which will drive the share price up a bit. This predictable mini bump is an attractive target for bots, and before you know it you've bootstrapped another hype-driven stock.
    - Kye 5y ago
      For example: the rush to buy Nintendo stock following the success of Pokémon GO. Nintendo is only a 1/3 owner of Pokémon and none of the owners developed the game.
  - edgyquant 5y ago
    Because people tend to have more money than intelligence. I also made a similar mistake years ago. I purchased 20 shares of MRVL, thinking it was Marvel, luckily I’m not the only one and I managed to turn a profit before selling once I figured it out.
- cf100clunk 5y ago
  The authors of the Rutgers study, Nikorov and Balashov, mention algos thusly in a CNN article from 2019: '(They) assumed retail investors would be making most of the mistakes. But Nikorov told CNN Business that the rise of algorithmic trading is probably the reason big mutual funds and hedge funds get fooled. “Computers scan for stocks and look for ones in play. So if there is [an] unexplained move, the algorithms don’t look for a reason. They just jump on the bandwagon,” Nikorov said.' https://www.cnn.com/2019/08/12/investing/ticker-symbol-confusion/index.html https://www.cnn.com/2019/08/12/investing/ticker-symbol-confu...
Sal77 5y ago
There was an AR company called Meta few years back with a cool AR desktop demo https://en.m.wikipedia.org/wiki/Meta_(company) https://en.m.wikipedia.org/wiki/Meta_(company)
- moron4hire 5y ago
  And the absolute worst product to experience in reality. It wasn't so much that it was bad. Bad can maybe be understood as "product in development". It was non-functional. Nothing on it ever worked in the smallest part.
  - ksaj 5y ago
    If one of them held onto the domain name, they probably made a good profit off of it just now.
- ksaj 5y ago
  Meta is definitely one of those words that pops up often in the commercial world. Linus Torvalds (Linux) was involved with a Y2K era company named TransMeta that made the Crusoe chip for a couple of laptops and a hand-held PIM. At dinner tonight my partner came up with another Meta company name as well.
  - hakfoo 5y ago
    It makes me think of Metamucil. Fibre for regularity! I guess now they've got the entire crap-in crap-out pipeline covered.
throwaway743 5y ago
The same happened with a hand full of cryptos with either "meta" in their name or ticker. Funny how one can utilize this as a trading strategy.
xor99 5y ago
Imagine where this meta was as big as facebook and solving problems through chemical, material, and biological products ...
martinflack 5y ago
Happened with ZOOM/ZM near the start of the pandemic as well: https://www.chartr.co/newsletters/woops-wrong-zoom https://www.chartr.co/newsletters/woops-wrong-zoom
xor99 5y ago
Metamaterials are real virtuality while the metaverse is virtual reality.
cs702 5y ago
Today's meme-driven financial markets in a nutshell: Is it growing? Meh. Is it profitable? Meh. Does it have a competitive moat? Meh. Is it robust against inflation? Bo-oh-ring. Is it newsworthy? Is it trending? Will others buy it? Buy! Buy! Buy! ...and then, of course, there are those who are taking advantage of this idiocy every day while it lasts.
gnicholas 5y ago
I wonder what percent of the buyers were mistaken and what percent were anticipating this bump. Relatedly, I wonder if executives of the Canadian company considered the possibility when rumors of the FB name change started circulating. Would it be legal for executives (or other employees with a decent amount of shares) to sell their company stock now, to lock in these gains? Or would the executives be subject to a purchase/sale schedule that would make it difficult to make nimble moves like this? Employees would presumably be less constrained with regard to the timing of stock sales.
- ksaj 5y ago
  What I think is interesting is that you can see from the volume where the spike is. It's not really that big of a spike, but after it went back to it's normal range, it subsequently worked its way back to the top of the spike again. Either people are still mistaking it, or this has given the company a bit of exposure and hastened an upward trend. If you look at the 5 day chart, the current price doesn't look all that out of place.
Havoc 5y ago
I wonder if this could have been gamed. i.e. FB employee knows it is coming, places a large bet on canadian co. Is that insider trading? It's insider knowledge sure but wrong company and a bet on the behaviour of other market participants
- gnicholas 5y ago
  Very interesting question. According to this summary, [1] it seems like it could not be considered insider trading. > The laws pertaining to insider trading encompass (a) trading by an insider while in possession of material non-public information; (b) trading by a non-insider while in possession of material non-public information, where the information either was disclosed to the non-insider in violation of an insider’s duty to keep it confidential or was misappropriated; and (c) communicating material non-public information to others. The concept of an “insider” is broad and includes officers, directors and employees of an issuer. In addition, a person can be a “temporary insider” if he or she enters into a special confidential relationship with the issuer and, as a result, is given access to confidential information. A temporary insider can include an issuer’s attorneys, accountants or consultants. My reading of this (as a former lawyer) is that under current law, insider trading requires that there be an insider involved. The insider can be the person who did the trading, or a person who transmitted information to other people. The insider has to be someone affiliated with the issuer (of stock that is being bought/sold). OTOH, there's probably not much benefit to buying stock in advance of the actual announcement. If the expectation is that the pop happens after the announcement, someone could just wait until the second it's announced and then make a purchase. Presumably the share price wouldn't have gone up appreciably in the intervening seconds (but HFT, I know), so it would yield roughly the same result, and without the possibility of insider trading charges! Follow-up question: is it a violation of insider trading laws to prepare a transaction and then execute it the instant that material information is made public? Does an insider (or someone informed by an insider) need to wait a reasonable period, in order to give the rest of the market time to digest the information that has just been revealed? 1: https://katten.com/Insider-Trading-A-Primer-10-26-2009 https://katten.com/Insider-Trading-A-Primer-10-26-2009
  - Havoc 5y ago

48 points by cf100clunk 5y ago

323 5y ago

It's a rational strategy. There are algos which buy stocks with tickers close to well known companies in the news. Especially in these days of meme stock, think about it, the reason to buy $META is meta ... (mind blown)

noja 5y ago
Because the algos are crap or on-purpose?
- dTal 5y ago
  I imagine there's a feedback loop. Inevitably there's going to be at least a few quick-fingered human investors who make the error, which will drive the share price up a bit. This predictable mini bump is an attractive target for bots, and before you know it you've bootstrapped another hype-driven stock.
  - Kye 5y ago
    For example: the rush to buy Nintendo stock following the success of Pokémon GO. Nintendo is only a 1/3 owner of Pokémon and none of the owners developed the game.
- edgyquant 5y ago
  Because people tend to have more money than intelligence. I also made a similar mistake years ago. I purchased 20 shares of MRVL, thinking it was Marvel, luckily I’m not the only one and I managed to turn a profit before selling once I figured it out.
cf100clunk 5y ago
The authors of the Rutgers study, Nikorov and Balashov, mention algos thusly in a CNN article from 2019: '(They) assumed retail investors would be making most of the mistakes. But Nikorov told CNN Business that the rise of algorithmic trading is probably the reason big mutual funds and hedge funds get fooled. “Computers scan for stocks and look for ones in play. So if there is [an] unexplained move, the algorithms don’t look for a reason. They just jump on the bandwagon,” Nikorov said.' https://www.cnn.com/2019/08/12/investing/ticker-symbol-confusion/index.html https://www.cnn.com/2019/08/12/investing/ticker-symbol-confu...

Sal77 5y ago

There was an AR company called Meta few years back with a cool AR desktop demo https://en.m.wikipedia.org/wiki/Meta_(company) https://en.m.wikipedia.org/wiki/Meta_(company)

moron4hire 5y ago
And the absolute worst product to experience in reality. It wasn't so much that it was bad. Bad can maybe be understood as "product in development". It was non-functional. Nothing on it ever worked in the smallest part.
- ksaj 5y ago
  If one of them held onto the domain name, they probably made a good profit off of it just now.
ksaj 5y ago
Meta is definitely one of those words that pops up often in the commercial world. Linus Torvalds (Linux) was involved with a Y2K era company named TransMeta that made the Crusoe chip for a couple of laptops and a hand-held PIM. At dinner tonight my partner came up with another Meta company name as well.
- hakfoo 5y ago
  It makes me think of Metamucil. Fibre for regularity! I guess now they've got the entire crap-in crap-out pipeline covered.

throwaway743 5y ago

The same happened with a hand full of cryptos with either "meta" in their name or ticker. Funny how one can utilize this as a trading strategy.

xor99 5y ago

Imagine where this meta was as big as facebook and solving problems through chemical, material, and biological products ...

martinflack 5y ago

Happened with ZOOM/ZM near the start of the pandemic as well: https://www.chartr.co/newsletters/woops-wrong-zoom https://www.chartr.co/newsletters/woops-wrong-zoom

xor99 5y ago

Metamaterials are real virtuality while the metaverse is virtual reality.

cs702 5y ago

Today's meme-driven financial markets in a nutshell: Is it growing? Meh. Is it profitable? Meh. Does it have a competitive moat? Meh. Is it robust against inflation? Bo-oh-ring. Is it newsworthy? Is it trending? Will others buy it? Buy! Buy! Buy! ...and then, of course, there are those who are taking advantage of this idiocy every day while it lasts.

gnicholas 5y ago

I wonder what percent of the buyers were mistaken and what percent were anticipating this bump. Relatedly, I wonder if executives of the Canadian company considered the possibility when rumors of the FB name change started circulating. Would it be legal for executives (or other employees with a decent amount of shares) to sell their company stock now, to lock in these gains? Or would the executives be subject to a purchase/sale schedule that would make it difficult to make nimble moves like this? Employees would presumably be less constrained with regard to the timing of stock sales.

ksaj 5y ago
What I think is interesting is that you can see from the volume where the spike is. It's not really that big of a spike, but after it went back to it's normal range, it subsequently worked its way back to the top of the spike again. Either people are still mistaking it, or this has given the company a bit of exposure and hastened an upward trend. If you look at the 5 day chart, the current price doesn't look all that out of place.

Havoc 5y ago

I wonder if this could have been gamed. i.e. FB employee knows it is coming, places a large bet on canadian co. Is that insider trading? It's insider knowledge sure but wrong company and a bet on the behaviour of other market participants

gnicholas 5y ago
Very interesting question. According to this summary, [1] it seems like it could not be considered insider trading. > The laws pertaining to insider trading encompass (a) trading by an insider while in possession of material non-public information; (b) trading by a non-insider while in possession of material non-public information, where the information either was disclosed to the non-insider in violation of an insider’s duty to keep it confidential or was misappropriated; and (c) communicating material non-public information to others. The concept of an “insider” is broad and includes officers, directors and employees of an issuer. In addition, a person can be a “temporary insider” if he or she enters into a special confidential relationship with the issuer and, as a result, is given access to confidential information. A temporary insider can include an issuer’s attorneys, accountants or consultants. My reading of this (as a former lawyer) is that under current law, insider trading requires that there be an insider involved. The insider can be the person who did the trading, or a person who transmitted information to other people. The insider has to be someone affiliated with the issuer (of stock that is being bought/sold). OTOH, there's probably not much benefit to buying stock in advance of the actual announcement. If the expectation is that the pop happens after the announcement, someone could just wait until the second it's announced and then make a purchase. Presumably the share price wouldn't have gone up appreciably in the intervening seconds (but HFT, I know), so it would yield roughly the same result, and without the possibility of insider trading charges! Follow-up question: is it a violation of insider trading laws to prepare a transaction and then execute it the instant that material information is made public? Does an insider (or someone informed by an insider) need to wait a reasonable period, in order to give the rest of the market time to digest the information that has just been revealed? 1: https://katten.com/Insider-Trading-A-Primer-10-26-2009 https://katten.com/Insider-Trading-A-Primer-10-26-2009
- Havoc 5y ago