Quick Take: Ring That Bell!
By
Rich Smith
February 26, 2008
|
While checking my ticker feeds yesterday evening, a familiar name popped up among the day's top gainers on the Nasdaq: Raygun-maker Ionatron, it seems, has changed its name to Applied Energetics (Nasdaq: AERG). In honor of this event, the company announced at noon yesterday that it will "preside over the closing bell" on the Nasdaq this afternoon.
The stock promptly jumped by roughly 13%.
You know where I'm going with this
Bidding up a stock because its chairman plans to ring a bell sounds a little ding-dong to me. But apparently, it's also dangerous for your portfolio. You see, on a lark, I ran a Google search for the words "preside over the closing bell," and pulled the first four tickers that showed up. The table below shows who they are, when they announced the "news," and what happened next:
So does that mean...?
That ringing the closing bell on the Nasdaq sounds the toll of doom? Of course not. Sheer coincidence, I expect. But it does poke a pretty big hole in the idea that by ringing a bell, a company will gain exposure that assuredly translates into a rising stock price.
Foolish takeaway
Sometimes, gaining exposure will only draw attention to the fact that your company is unprofitable and burning through cash at the rate of nearly $7 million a year. Not naming any names here. I'm just sayin'.
For related Foolishness on Applied Energetics under its previous name, read:
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