When the richest man on the planet, Tesla CEO Elon Musk, tweets, everyone seems to listen.
On Thursday morning, Musk urged his Twitter followers to “use Signal,” an encrypted messaging app as an alternative to WhatsApp or Facebook Messenger.
— Elon Musk (@elonmusk) January 7, 2021
However, since the market is caught in a speculators paradise, the first immediate thought that flowed through the minds’ of Robinhood traders after Musk tweeted was to buy a penny stock called Signal Advance, Inc.
Shares of the penny stock trading on the OTC Markets surged as much as 1,200% in two days.
In a market overrun by speculators (shown below via BofA), momentum chasing Robinhooders have yet to figure out that Musk was, in fact, referring to Signal, a cross-platform encrypted messaging service – not the penny stock.
On Friday, Signal took to Twitter to explain that it has nothing to do with Signal Advance.
“It’s understandable that people want to invest in Signal’s record growth, but this isn’t us,” Signal tweeted. “We’re an independent 501c3 and our only investment is in your privacy.”
Is this what stock analysts mean when they say that the market is giving mixed Signals?
It’s understandable that people want to invest in Signal’s record growth, but this isn’t us. We’re an independent 501c3 and our only investment is in your privacy. pic.twitter.com/9EgMUZiEZf
— Signal (@signalapp) January 8, 2021
In speculative periods, this kind of investor behavior was seen a few years back when market participants panic bought Zoom Technologies, thinking it was Zoom Video Communications.
Armed with stimulus checks, Robinhooders will panic buy anything, suggesting that today’s markets are in an “epic bubble,” as recently explained by GMO’s Jeremy Grantham (read: here).