A pump-and-dump scheme refers to fraudulently spreading false information to create a buying frenzy. The pumpers then dump the stock by selling at inflated prices.
Last week, online luxury retailer Farfetch (FTCH) rallied from $1.65 to as high as $2.23 on Nov 28. Rumors circulated that its founder, John Neves, might make an offer for the site. Neves holds a 15% stake in Farfetch. On Nov. 29, 2023, Richemont (CFRHF) said that it did not plan on lending money to Farfetch or investing in it. Instead of posting Q3 results, the firm delayed its report.
It traded as low as 92 cents before buyers stepped in.
Investors should brace for poor results in the report. The company may need financing soon to stay in business.
On November 24, 2023, Reuters cited an unknown source that the European Union would approve Amazon’s (AMZN) proposal to buy iRobot (IRBT). On Nov. 27, the EU warned the opposite of the rumor. The EU informed Amazon that it is concerned the proposed acquisition may restrict competition in the market for robot vacuum cleaners (RVCs).
IRBT shareholders should not expect regulators to investigate Reuters for the report. Either way, iRobot’s business is in serious decline. It could run out of money before Amazon buys it.
Speculators may still bet on Amazon succeeding in buying out the company. That would send IRBT stock to the buyout price of $51.75.
