How Musk’s tweet sent a wrong ‘Signal’ soaring over 11,700%?

2 min read | January 12, 2021 03:23 PM AEDT | By Kunal Sawhney

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How Musk’s tweet sent a wrong ‘Signal’ soaring over 11,700%?

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Summary

After WhatsApp’s updated privacy policy, Elon Musk urged his followers to “Use Signal”.

However, people misunderstood the intended Signal app with another company called “Signal Advance” and rushed to buy its shares.

The share price of Signal Advance shot up by more than 11,700% in just three trading sessions.

In the wake of the latest changes in WhatsApp’s privacy policy, Tesla CEO Elon Musk had urged his Twitter followers to “Use Signal”. Signal is an encrypted cross-platform instant messaging service, which is developed by Signal Foundation. It is a non-profit organization and runs on donations.

The “Signal” Elon Musk referred to is a messaging app that could be used as an alternative to WhatsApp. However, people mistook it for another company of similar name and ended up buying “Signal Advance”, a micro-cap technology stock which trades in the Over the Counter (OTC) market.

This fuelled an unprecedented demand of Signal Advance’s shares which bolstered its stock price from mere $0.6 to $70.85. That’s a return of over 11,700% in just three trading sessions.

Image Source: © Kalkine Group 2021

Elon Musk has a huge fan following across the globe, which is also reflected in the number of his Twitter followers, which is just over 42 million. This has led to a gigantic volume of trading in the “wrong” Signal.

Before his tweet, Signal Advance used to trade with an average volume of around 10k shares per day, somedays even below 1k. However, after his tweet, the trading volume grew multifold to over 2 million shares a day (on 11 January 2021).

Signal’s Clarification

The matter escalated so much that even the “right” Signal, which is not even a publicly listed firm, had to come out and clarify. As the matter came to its notice, Signal took to Twitter and clarified that there had been a misconception amongst investors.

However, a lot of people also got it right and rushed towards registering themselves on the messaging app named Signal. This unexpected rush was more than Signal could handle, and the traffic crashed their servers.

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