In 2014, Google acquired a company called Nest Labs that develops smart thermostats, smoke detectors, and carbon dioxide detectors. They paid a hefty price of $3.2 billion.
The purchase news got people looking to invest in this suddenly hot company. The strong interest of potential investors drove up the price of the penny stock NEST. The only problem is that this wasn’t the name of the stock of Nest Labs. In fact, Nest Labs was a private company.
Instead of what they meant to invest in, people had bought shares in Nestor Inc, a company founded in 1975 that makes traffic enforcement systems for the government. The naming of the stock’s ticker (NEST) confused many investors. The icing on the cake is that Nestor Inc. had been taken over by a court-appointed receiver in 2009. People who didn’t do their investing research drove this bankrupt company from 0.2 pence up to almost 4 pennies by trying to buy a company that didn’t even offer stock publicly. That’s a 1900% increase.
Nowadays, Nest Labs prospers as a part of Alphabet. Since then, the company has doubled its hardware portfolio. In 2017, they merged into Google’s hardware unit in February 2018, taking their place next to Google Chrome and Chromecast. Those who purchased the correct stock back in 2014 must be happy with their decision. Those who missed out… Well, a quick Google search can do wonders sometimes.