Blackberry stock drops 20% after acquisition rumors denied (and the SEC should investigate)
Yesterday, Blackberry’s stock surged 20% when rumors suggested Samsung inquired about purchasing the rapidly declining tech brand. Today, Blackberry has plummeted 20%, erasing yesterdays gains after both parties denied these claims. And if you ask me, the SEC should investigate this 24-hour stock price roller coaster.
The stock market is already filled with corruption, from insider trading to price fixing to the next flavor of the day. One rapidly growing trend is price volatility of individual stocks due to tech acquisitions. In the traditional stock market, Blackberry would be dead in the water, a once-proud company gravely in danger of becoming the next Palm. Most think this fate is inevitable, which would urge many market analysts to conclude it’s doomed to reach zero.
Not so fast! Blackberry might be headed to zero in terms of sales and revenue, but the company still has a long list of assets that could infuse highly sought proprietary value into a suitor. Even sitting at $10/share and heading towards $0, BlackBerry’s stock market fortunes were changed when Reuters reported that Samsung could buy Blackberry for up to $15 per share.
Whether the stock is headed to $0 or not, those stocks are worth $15/share if the company is being acquired at $15/share. Since the stock was priced at $10 there was an obvious opportunity for people to pick up a potential 50% growth with quick turn around. Postured as rumor it came with an assumed and calculated risk, so the rise in yesterday’s stock price leveled out around 20%.
Then the rumors were denied. Today the stock is down 20% from yesterday close, losing almost all of the gains in this sudden surge. Makes you wonder, doesn’t it? Us too… and it should make the federal government wonder as well. There are hundreds of millions of dollars to gain by inserting an acquisition rumor into the industry dialogue, watching the market react, selling based on this reaction, and then watching the stock return to earth when the rumors are denied. The fact that this latest rumor came with a specific acquisition price, and thus could have a more immediate and specific impact on the stock market, make it seem shadier- especially considering the immediate denial of said rumor.
Is it possible this was an innocent rumor that just happened to kick up dust on a Canada’s Old Faithful? Absolutely and that is – more than likely – the case. But the nature of the industry, condition of Blackberry’s ticker, specifics of the rumor, and swiftness of the rise and fall make underhandedness seem like a possibility and I hope it’s something that the government investigates.
This trend of tech acquisitions make picking stocks much more difficult. What could be widely considered as a terrible stock can become a huge opportunity if the company is acquired. It’s easy to manufacture an acquisition rumor which can have an immediate impact on the market, amounting to billions of dollars in cash changing hands. The motivations to artificially affect stock prices are a real threat and the next crazy story could be right around the corner.
What if Comcast bought Gogo? What if Amazon bought Netflix? What if Google bought Tesla? What if Samsung bought GoPro? All these acquisitions are possibilities. All these acquisitions would have a significant affect on the stock market. None of these deals – as far as I know – have ever been rumored, discussed, or speculated… but if a little birdy WERE to whisper in someones ear, what would happen?
I want to reiterate that I’m not accusing anyone of foul play in the case of BlackBerry, Samsung, or Reuters, I’m merely saying that from an outsiders perspective it seems a bit fishy. And if foul play were to be involved here, chances are equal or greater that it’d be due to someone in the financial services industry.
This story will likely blow over and be forgotten about, but the 24 hour fluctuation of Blackberry’s price shows the delicate nature of the stock market, and you can bet your bottom dollar that it’s the sort of thing that happens every single day. Let’s just hope you stayed out of Blackberry and still have your bottom dollar to bet.
Will we ever see one of these with a Blackberry logo?