By Peter Mueller
Last Friday, the social media company Twitter announced its plans to become a publicly traded company before Thanksgiving. Analysts are expecting the initial public offering (IPO) to be a success, with “The Wall Street Journal” reporting a $1 billion registration for launch. In the announcement, Twitter released its stock ticker: TWTR. Twitter is one of Wall Street’s most highly anticipated upcoming IPO.
While the majority of investors have most likely taken a Business 101 class, it seems that some have misunderstood the meaning of an IPO.
Soon after Twitter’s announcement, the stock of a defunct home entertainment retailer — Tweeter — saw shares rise nearly 1400 percent according to Marketplace, a radio show on the National Public Radio that discusses market trends. Tweeter used to be listed with the ticker TWTR, but was later changed to TWTRQ when the company declared chapter 11 bankruptcy in 2007.
The market valued TWTRQ at a penny per share on Oct. 3 before rising to 15 cents before settling back to 5 cents at the end of the day. Stockholders traded approximately 14 million shares of Tweeter by midday last Friday.
When the Financial Industry Regulatory Authority (FIRA) became aware of the situation on that Friday, they suspended the trading of Tweeter’s shares. Shares in defunct companies like Tweeter are traded on over-the-counter markets rather than on major exchanges such as the NYSE.
In an official release early Monday, FIRA stated the recent activity of TWTRQ “demonstrated a widespread misunderstanding related to the possible initial public offering of an unrelated security.”
The relation between the two tickers has led analysts to believe that the rise in share price can be linked directly to the news of Twitter’s IPO announcement.
On Tuesday, the FIRA assigned a new ticker to Tweeter, THEQG, to avoid any future confusion with Twitter.