Pump and Dump
Curious about one of the latest spamming storms, I've been collecting a few of the scam emails which recommend purchasing shares in some company. My intent was to do a small amount of analysis, primarily to see just how much these stocks increased in price, and secondly to see what shape the share price graph made around the time I received the email.
It turns out these "Pump and Dump" type of emails have received quite a bit of attention and analysis. There are many places to find in depth descriptions, and in fact, this article just appeared on SlashDot:
Therein lies a paper analysing a large set of these emails. My work, it seems, is done.
Nonetheless, here's what I found from my small sample set:
Date received: 11th Jan
Price increase: 2773%
Chart comment: Price gradually fell from 0.40 in Sept to 0.033 in November where it dipped dramatically to 0.011 and trades went from 25000 to 746500. It then climbed steeply to 0.13 at the start of January. On the 8th January, trades rocketed to 3.1 million and the share price peaked at 0.305 on the 16th January. It is currently 0.19.
Date received: 10th Jan
Price increase: 139%
Chart comment: Was stable at 0.25 in November but climbed to 1.50 with very few trades just before December. Lots of trading in mid December took the price to 2.25 before falling to 0.87 on the 16th January. It has since risen again to 1.21 under very heavy trading. Price increase assumes purchase on 16th January, which is after I received the email.
Date received: 9th Jan
Price increase: Hard to tell.
Chart comment: Price steady at 1.26 until start of January where small amount of trading took to to 2.00. Under heavier trading on the 8th January, it fell to 1.54 and then further to 0.70 on the 18th January. A recent spike in trading leaves the price at 0.85.
Evidently, if one could pull off a few of the 2773% gains, there is some serious money to be made. A gain like that could quite easily cover losses on such cheap stocks. There is a lot of discussion over the legality of this scheme - essentially the spammer is asking a bunch of people to buy a particular stock. While not exactly illegal in itself, the method is clearly deceptive and just plain evil. This is another example of the potential for lucrative gains in the online world, if one were to simply prepared to forgo their soul.