LTUM Stock Alert: Why Is Lithium Corporation Stock Up Today?

Lithium Corporation (OTCMKTS:LTUM) surged today on a powerful social media rumor. Yesterday, a press release posted on MarketWatch announced that the company had been acquired by Tesla (NASDAQ:TSLA). Momentum quickly spread afterwards. Of course, since then, sources have confirmed the news is false. However, that didn’t stop LTUM stock from climbing. Shares have fallen back this afternoon, but they are still in the green as of this writing.

a lithium mine
Source: Shutterstock

The false press release did not immediately push LTUM stock up. This morning, shares remained stagnant, only beginning to surge close to noon. Then, at it’s highest point, Lithium Corporation spiked by nearly 280%. That said, shares soon began falling almost as quickly as they rose.

Currently, LTUM stock is up just 27% on the day at under 36 cents per share.

What’s Happening with LTUM Stock?

At first glance, the Lithium Corporation press release looks convincing. After all, MarketWatch is a trusted venue. Additionally, lithium is a key component for electric vehicle (EV) production and Elon Musk has made deals with miners before. So, a micro cap like LTUM is exactly the kind of company Tesla could easily acquire.

Driven by the false report, LTUM stock’s performance demonstrates the power of hype. As seen today, social media and jumped-to conclusions can send stocks skyrocketing to new heights.

After tweeting about the story, one popular market influencer removed their posts and issued the following statement:

5W Public Relations, the listed media contact on the release, has also since confirmed with InvestorPlace that the press release is false. 5W also maintains that it is in no way affiliated with the statement. Hours after its surge, Lithium Corporation issued a statement on the Tesla acquisition rumors, too:

“[C]ontrary to a press release issued by unknown parties on the 12th of April and rumors circulating on social media, we have not received so much as an expression of interest from Tesla […] We would be happy to chat with Elon if he was inclined, but presently there is no relationship between the two companies.”

Amid this confusion, TSLA stock is also trading well today. However, its progress can be primarily attributed to a recent endorsement from Ark Invest CEO Cathie Wood.

What It Means

Lithium Corporation’s sudden rise should remind investors to proceed carefully when penny stocks experience sudden surges. The false report looks credible at first glance, demonstrating how important it is for investors to conduct their own careful research.

A quick look at both companies’ press rooms would have shown no announcements of the deal. Plus, no major news outlets rushed to cover the deal after the false statement went live. That should have raised some red flags. By the time the Twitter (NYSE:TWTR) user listed above confirmed the rumor was actually false, LTUM stock was already falling.

Momentum from this rumor has kept LTUM stock fairly elevated today, but it is likely to continue falling as the truth circulates.

On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that’s writers disclose this fact and warn readers of the risks.

Read More:Penny Stocks — How to Profit Without Getting Scammed

On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Samuel O’Brient has been covering financial markets and analyzing economic policy for three-plus years. His areas of expertise involve electric vehicle (EV) stocks, green energy and NFTs. O’Brient loves helping everyone understand the complexities of economics. He is ranked in the top 15% of stock pickers on TipRanks.

Article printed from InvestorPlace Media,

©2023 InvestorPlace Media, LLC