Market Overview

Penny Stock Auris Medical Spikes On Case Of Mistaken Identity

Penny Stock Auris Medical Spikes On Case Of Mistaken Identity

Auris Medical Holding AG (NASDAQ: EARS) stock traded higher by as much as 30 percent Wednesday morning after Johnson & Johnson (NYSE: JNJ) announced a $3.4 billion buyout of Auris Health. The only problem? Auris Medical Holding has nothing to do with Auris Health or the buyout.

How It Happens

Web-reading bots have made traders millions of dollars in profits in recent years. These automated programs scan newswires and social media sites looking for market-moving headlines and then automatically trade stocks and options based on the sentiment of those headlines.

Ideally, traders end up making serious bank by beating other traders to the trade.

However, sometimes the bots get it wrong, particularly when it comes to identifying the correct stock to trade.

Cases Of Mistaken Identity

Back in 2014, Facebook Inc (NASDAQ: FB) acquired virtual reality technology company Oculus VR. On the day the deal was announced, shares of Canadian company Oculus VisionTech spiked more than 100 percent when bot traders mistook the identity of the company.

Of course, the stock quickly reversed direction.

In 2016, shares of Raptor Pharmaceutical Corp. (NASDAQ: RPTP) jumped more than 8 percent in pre-market trading a positive news story about a Virginia school system using machines produced by Raptor Technologies.

Auris Vs. Auris

A similar story likely played out Wednesday when shares of penny stock Auris Medical jumped from Tuesday’s closing price of 36 cents to as high as 47 cents in early trading. Benzinga Pro reported at 9:10 a.m. that the move was likely due to a case of mistaken identity on the part of trading algorithms and traders.

Once traders identified the correct company involved in the deal, shares of Auris Medical plummeted and are up 9 percent at time of publication.

Related Links:

10 Painful Mistakes New Traders Make

John Bogle's Biggest Investing Mistake And What He Learned From It


Related Articles (JNJ + EARS)

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