Was enGadget the victim of an Internet pump-and-dump?
Recently, enGadget published an email that was sent to them from an Apple employee. This email had originated somewhere on the Apple email server and enGadget decided to run with it. Within minutes of publishing the news of a suspected iPhone delay the Apple stock dropped, knocking four billion dollars in market cap off of Apple stock. The stock did rebound over the course of the afternoon. With the FCC news of the iPhone’s approval it climbed even higher.
This leads me to wonder if enGadget was being used as an unwitting accomplice in an Internet stock pump-and-dump scheme. Or would this be a dump-and-pump scheme?
Think about this for a minute. You have inside information about Apple and know that the FCC is about to announce approval for the iPhone but, the stock is too high for you to properly profit off of it. Why not send out an email telling everyone that the iPhone is going to be delayed? Then, after the stock drops, you buy up a whole bunch! Any delay news would likely be refuted by Apple before the day ends, at which point the stock will rise again. Couple that with the expected approval nod from the FCC and you have a suspicious looking example of a stock fraud.
Now, I’m not saying Apple is behind this as it could have been done by someone who hacked into Apple’s mail server.
Between 12:00 PM and 12:05 PM on May 16, 2007 Apple stock went from 107.79 to 103.42 with a volume well over three million shares! By Friday evening the stock had climbed to 110 on the good news from the FCC. With the right timing someone could have just made themselves almost $7 per share in profit.
Sounds like an interesting theory but at the end of the day the iphones are really awesome technology. I’m a student and use it all the time.
Julius Briner
http://www.geocities.com/jbriner123/MyPage.html