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.
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.
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.
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.
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?
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.'
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.
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.
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.
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.