Shares in a bit of recognized US start-up have virtually doubled in worth, seemingly as a result of merchants thought they had been shopping for into the agency behind Snapchat.
Snap mentioned final week it planned to raise $3bn in a stock market listing, although no date was set.
Since then, over-eager traders seem to have been getting forward of themselves, shopping for into an unrelated firm referred to as Snap Interactive.
The cellular relationship app maker’s shares have surged 95% up to now week.
How are they completely different?
Snap Interactive is a software program firm based mostly in New York, valued at round $54m (£43m).
Specialising in actual time video communication, its manufacturers embody Camfrog, and it claims to have helped “a whole bunch of tens of millions of customers around the globe make significant friendships and romantic connections”.
Snap Inc is predicated in San Francisco, and after its deliberate flotation might be price as a lot as $25bn.
That will be one of many largest expertise listings in years and make founder Evan Spiegel, who arrange the agency in 2011 when he was 26 years outdated, even richer.
Snap’s Snapchat app lets customers change movies and footage and is especially in style with individuals aged 13 to 24. Nevertheless it additionally needs to department out and now describes itself as “a digicam firm”. It has launched glasses with a digicam in them.
Each corporations are loss-making.
Not the primary time
Traders have mistaken little-known firms for extra well-known ones earlier than, and a similarity in identify is normally the trigger.
Shares in Tweeter House Leisure Group soared greater than 500% as pleasure ran excessive a few share sale on the immediate messaging app Twitter in 2013.
A 12 months later, Fb’s $2bn deal to purchase digital actuality headset maker, Oculus VR, despatched shares in Oculus VisionTech surging greater than 150%.
“To err is human, however to purchase shares with out checking what you might be shopping for could be a expensive mistake”, mentioned David Kuo, chief government of the Motley Idiot Singapore.
“Investing ought to by no means be about taking pictures first and asking questions later. Ask all the mandatory questions and ask them once more earlier than you pull the set off.”