Trading in a mysterious Chinese company called Zoom Technologies has been suspended after its stock surged, apparently due to people confusing it with the same-named video conferencing software.
Zoom Video Communications, which offers video conferencing technology, has enjoyed unprecedented popularity this year, with a huge chunk of the world’s workforce now working from home due to the COVID-19 pandemic.
But the video conferencing company does not have the ZOOM ticker on the NASDAQ. This is owned by Zoom Technologies Inc, a Beijing-based business that hasn’t posted an update in five years.
Zoom Technologies has a market value of $US31.3 million, while Zoom Video is worth $US40 billion.
Due to this, apparently confused investors have seen the ZOOM ticker and thought they’d stumbled upon the bargain of the decade.
Stock in Zoom Technologies has skyrocketed recently, more than tripling in the last five weeks.
In the same time, Zoom Video’s shares have risen by more than 30 per cent.
Late last week, the US Securities and Exchange Commission moved to stop Zoom Technologies from trading on the NASDAQ.
“The Commission temporarily suspended trading in the securities of ZOOM because of concerns about the adequacy and accuracy of publicly available information concerning ZOOM, including its financial condition and its operations, if any, in light of the absence of any public disclosure by the company since 2015,” the SEC said in a statement.
“And concerns about investors confusing this issuer with a similarly named NASDAQ-listed issuer, providing communications services, which has seen a rise in share price during the ongoing COVID-19 pandemic.
“The Commission cautions broker-dealers, shareholders and prospective purchasers that they should carefully consider the foregoing information along with all other currently available information and any information subsequently issued by the company.”
There isn’t much public information on Zoom Technologies, the SEC said.
“ZOOM is a Delaware corporation that reported in 2014 having its principal executive offices in Beijing, China,” it said. “Unsolicited customer quotations for its common stock are quoted by broker-dealers on OTC link operated OTC Markets Group Inc.”
Zoom Video has been used widely around the world for video conferencing to replace in-person meetings in the wake of the coronavirus pandemic.
It has also been used by governments, leading to concerns around privacy and security.
Reports have emerged that the UK Ministry of Defence has banned its staff from using the software, with “security implications” being investigated.
The department warned its staff to “be cautious about cyber resilience” in “these exceptional times”.
Despite these concerns, vision soon emerged of the UK government, including Prime Minister Boris Johnson, holding high level COVID-19 response talks on Zoom.
There has also been the emergence of “zoombombings”, with trolls taking advantage of a screensharing feature to broadcast “shocking” imagery to participants in a video chat.
Vice News has also reported that Zoom’s iPhone app had been sending data to Facebook, even if the user didn’t have a Facebook account.
“We have been deeply upset to hear about the incidents involving this type of attack,” Zoom Video said in a statement.
“For those hosting large, public group meetings, we strongly encourage hosts to change their settings so that only the host can share their screen.
“For those hosting private meetings, password protections are on by default and we recommend that users keep those protections on to prevent uninvited users from joining.”