Open thread: Is Stock Twittering a Giant Pump-n-Dump?

June 24, 2009 5:00 pm

twitter_logo_headerTwitter is popular, there is no doubt about that. In fact, the top 20 people that twitterers follow have at least 1 million followers each. Oprah twitters, Ashton Kutcher twitters and even President Obama twitters.

Now there is a rising trend to use Twitter to get stocks tips. Groups have formed such as StockTwits to share ideas on stocks in real time. But, does this unregulated and unchecked platform pose a risk of becoming a giant Pump-n-Dump network?

Recently, Barron‘s wrote about this concept, albeit cautiously:

Already, Twitter influences stock and options trading.

“Since brokers have to save instant messages and e-mail, but thus far have no such mandate for tweets, well, you can guess that the far more discreet traffic is on Twitter,” says Jon Najarian, of It was on Twitter that Najarian first heard last week’s news that Matrixx Initiatives ‘ (ticker: MTXX) Zicam nasal spray allegedly damaged people’s sense of smell. “Guys started tweeting and the stock dropped from $19 to $13,” he says. Matrixx has since pulled Zicam off the market. The stock was recently at about $5.55.

So, is this something to worry about? Would you trust stock info/tip from a tweet?

Comments encouraged….

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