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How a penny stick explodes from darkness to 451% wins over chat forums

(Bloomberg) – “Are you still awake?” It was 12:43 am on January 19 and TRGainz, a frequent user of the Stocktwits social media platform, was getting nervous. Always liquid was like that. “I can’t sleep,” he replied seconds later. In nine hours the New York financial markets would open, and when they did, suddenly and seemingly miraculously, an obscure penny stock called Blue Sphere Corp. would appear. go up and give those who topped up the stock in the weeks prior to a profit of roughly $ 30 million. TRGainz and Alwaysliquid knew what was coming and struggled to contain their excitement. For days, Blue Sphere has been the talk of the town on this Stocktwits page and other sites such as a message board for Reddit users dealing with penny stocks. The fact that the company had neither a listing nor current financial information of any kind did not seem important to everyone. It was a clean energy company, and with the Democrats in control of both the White House and Congress, that was enough to make it a salable story for the day-to-day trading crowds that turned into one in the big pandemic stock rally Moneyman223 was a consistently prominent voice, begging colleagues to step in before the stock exploded. “Get in or regret not getting in,” the money man wrote early January 14, the day after another Stocktwits member marked Blue Sphere as the clear winner on the Democrats’ climate change agenda. Late the next day, the last meeting of Moneyman223 acted before the long weekend and nudged again, “Not too late for you fools to get in.” Then a character named Byelowsellhi declared, “Have a great weekend, future millionaires.” Blue Sphere rose as announced on January 19th. At the end of the day, it was up 451% after climbing from six tenths of a cent to six over 3 cents. Around 2 billion shares were traded that day, which is an astonishing, yet not entirely unusual, volume in a burgeoning new age of penny stock speculation. The chat forum posts came quick and angry as the stock rose: “Incredible day everyone,” “We get filthy rich together,” and “Congratulations to everyone who took the risk and believed in themselves !! !!!! ” Every day there are a dozen or more Blue Sphere-like stories of tiny, profitless businesses mysteriously moving from obscurity to viral sensation. Recently, the breakneck pace of boom and bust in these penny stocks has started to drown out all other forms of speculative mania in the pandemic market. Let’s call it another foam marker – retailers facing mass psychosis amid commission fees and zero benchmark interest rates – that alongside the GameStop Corp. saga, the triple rally in cryptocurrencies, the daily minted SPACs, and the record highs are being driven by the most important stock indices. “People look around and say, ‘What else can I do with my money? ‘”Said JJ Kinahan, chief marketing strategist at TD Ameritrade. The rules for trading over-the-counter securities vary from broker to broker. However, they can be purchased for a fee on any TD Ameritrade trading platform. “That would be one of those people who is at the top of my list and telling people, ‘Please understand the risk of you going in there.’ I learned early in life that if there are many pros, there are many cons. People may not want to tell you about the cons. ”For anyone watching from afar, it’s hard to understand how the current penny stocks are How does a critical mass build around them? The universe of companies that make up over-the-counter trading in America is vast and they trade on lightly regulated listing services where information is little or no information It’s almost impossible to pinpoint the origin of the spark on the internet. In trying to locate the spark, these types of message board conversations almost always require a start, and while no one has seen what is going on in today’s dealer chat rooms attributing illegal intentions, it is difficult not to notice the resemblance to yesterday’s penny-stick madness, as programs like “pump-and-dump” and “bigger.” Fool “were all the rage. Stocktwits, which distinguishes itself as the largest community for investors and traders, has increased its focus on moderation and support of content. According to Rishi Khanna, Chief Executive Officer, it is something we look out for. Now we can obviously no longer pay attention to every single screen, so we have to rely on the community to report something that seems a bit weird or funky, ”said Khanna in an interview. “We’re not going to stop everything – it’s just physically impossible – but we’ll do our best.” Attempts to solicit comments from Blue Sphere officials have been unsuccessful. Emails and voicemails left by Bloomberg News were not replied to. The company hasn’t filed a report with the US Securities and Exchange Commission in about two years. After the stock rallied last week, a Stocktwits member with the username WolfeRegalia wrote, “I can’t find any real information. The company’s website has the financial data backed up to 2018. Are there any pointers anyone can recommend? Thanks in advance. “This is the challenge of distinguishing a true long-term penny stock investment from a straight pump – when a group of people pile into the same stock at the same time to quickly influence prices. A fast growing Reddit forum devoted to Penny Stock Trading recently updated its rules to curb user shilling. The site, r / pennystocks, now has over 430,000 members – “astronauts” using the site’s own nomenclature. According to Breakout Point, a data and analytics company that tracks such information, that’s a 21% increase from late December. At the top of the r / pennystocks page is a drop-down menu with frequently asked questions. One option is “Identifying a Pump” and references a three year old post entitled “How to Find and Drive Pumps”. The first step? According to the post, start downloading Stocktwits, but use your own discretion. “I’m reluctant to just tell you this because I don’t want you to get into all the hype there,” the post reads. “Remember, don’t trust anyone, especially all the talk about stocktwits. Most of it is rubbish. Do not believe it. “Then find a stock that recently went parabolic, research what people told people to buy (they are the pumps) before it went up, follow those people and set up alerts as to when to do New posts. “Do not cross the border,” says the post. “Now I want to emphasize the importance of pumping a stock to be illegal. However, this is not an investment in a stock that is increasing in price and volume. “But in the end:“ Good luck to everyone! May your losses be small and your profits high. “These days there are plenty of hope.” The newly minted day traders who have been such dominant forces in the market – they keep finding other places to go that can bring speculative passion to the mix, and it seems that penny stocks are the latest, ”said Liz Ann Sonders, Charles Schwab’s chief investment strategist. Trading OTC stocks is possible for those with Schwab brokerage accounts. “I have no speculations or knowledge or guesses as to what starts with it, but whatever, it feeds on itself and this has been another hot trend since the start of the year.” As for Blue Sphere, the fever doesn’t seem to have broken. The stock price collapsed nearly 50% in the first three days after its pop on Jan. 19, but it rose again on Monday, ending the day at 2.2 cents, up 26%. For more articles like this, visit us at bloomberg.com. Sign up now to stay up to date with the most trusted business news source. © 2021 Bloomberg LP

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