CAMBRIDGE, Mass.--(BUSINESS WIRE)-- ARIAD Pharmaceuticals, Inc. (NASDAQ:ARIA) today announced That their phase 2 clinical drug Ponatinib, a pan BCR-ABL inhibitor, has failed to meet it's primary safety endpoint goal. Dr, Harvey Berger, the company CEO of Ariad expressed his disappointment on the latest set back; "we are shocked by the data we received today on Ponatinib, and we are currently in internal discussions to decide where we will go from here."
Unbelievable news, isn't it? It sure is, because it is a false story and an example of what you might find posted on a stock board.
Amazingly, people actually buy and sell stocks based on what they read from an anonymous poster without first verifying the validity of it. Many of these posters have their own agendas, and some posters are paid for the replies they receive on their posts.
These days the most popular stock board is on Yahoo. Yahoo does not actively monitor their stock board and does not implement any system to stop multiple I.D aliases from posting. Worst of all, they do nothing about fraudulent posts, which can cause damage to a company and its stock. Here are some recent examples of what I am talking about.
I saw this message on the Antares Pharma (AIS) board recently: "This news just breaking, AIS is filing for Bankruptcy."
An obviously blatant lie designed to cause a few people to sell to the bid. The hope of these posters is to take out the current bid, bringing the stock price down. When a stock has a weaker bid on the book, the PPS can be taken down further than most people might realize, just from a few sells. You will see more "bashers" appear on the boards when the volume in a stock has slowed down. It is easier to manipulate a stock downwards because the bids are usually weaker on low volume days.
Pumpers can do equally as much damage as bashers, causing knee-jerk reactions and phony exuberance.
Unsophisticated traders and investors often jump on the pump, DTBP 4 to 1, and many times end up facing a maintenance call from any decline in PPS because they got caught in the hype caused by the blatant lie of a pumper.
I have seen similar blatant lies and misinformation on lower price speculative biopharmas like AEterna Zentaris (NASDAQ:AEZS), Zalicus (ZLCS), and Keryx Biopharmaceuticals (NASDAQ:KERX). Go to these boards and see for yourselves. Because the PPS's of these companies are low, if enough people believe the nonsense on these boards without first doing the DD, the stock prices can move significantly in one direction or the other.
So how can investors weed through the nonsense to actually find valid and useful information on these stock boards?
The answer is to read through the posts on a particular board that pertain to a stock you might be interested in buying, and look for information that might actually add or subtract value to the stock you are considering.
Below are some solid examples of good information you can do fact checks on. Because many of these posts are long, I will provide links for you to read yourselves.
This example is from the Yahoo Eli Lilly (NYSE:LLY) stock board and concerns Posilac, a hormone treatment for cows. This kind of information can be very relevant to the bottom line of Eli Lilly, affecting the stock price. After the initial post, other posters chime in with some thoughtful opinion about Posilac.
This post is from the Abbott (NYSE:ABT) Yahoo board where the poster talks about a press release from Abbott. To start this article, I gave an example of how a phony press release can do damage to a stock, so it is always good to verify the accuracy of these kind of posts.
Stock boards can be a valuable place to find information and intelligent discussion about stocks as these examples show. They can also be a place of blatant misleading nonsense that fester confusion and deception. Never believe on face value what you read on a stock board and certainly never make a hasty decision based on what you read on them.
If you find some information that looks interesting, do the research, check the facts, and try to verify that it is indeed factual.
Disclosure: I am long AIS.