On 7 March, the Twitter account of Aditya Kondawar, chief operating officer at JST Investments, saw a flurry of peculiar requests. Three digital marketing agencies reached out to him via Twitter, offering Kondawar money in exchange for tweets about a particular company. By the time the third agency reached out, Kondawar knew what was coming. “Let me guess. You want me to tweet about Salasar Techno?” he asked. He was right.
Kondawar, who has more than 72,000 followers on Twitter, was just one of many “stock influencers” who received the same proposition. Many took up the offer. However, the co-ordinated tweets about Salasar Techno by more than 25 accounts quickly raised suspicions. Soon, screenshots of agencies reaching out to influencers flooded the social media app.
Alok Jain, the founder of Weekendinvesting.com, even tweeted out a warning. “Please be careful of Salasar… this is likely a pump and dump story… many influencers are being approached to push this in return for INR 25-30K (Rs 25,000-30,000 [US$328.77-US$394.53]),” tweeted Jain, who has 188,000 followers on Twitter.
After it became clear that there was an orchestrated campaign to promote Salasar Techno’s stock, a number of influencers deleted their tweets praising it. It is not clear who appointed the digital marketing firm to promote the stock. In a press release release BSE India Clarification on Messages being circulated on social media Read more dated 10 March, the company clarified it did not have any role in the circulation of these messages.
Nevertheless, the New Delhi-headquartered telecom tower manufacturer’s stock rose by nearly 10% on 9 March, with no other factor supporting this sudden jump. The stock has a low free float free float Free float The free float is a measure of actual availability of stocks of a company in the market for public investment. , with its promoters holding nearly 70% of shares. With a market cap of Rs 648 crore (US$85.2 million) and a trading volume of 73,040 shares, it is extremely susceptible to demand and supply-induced volatility. This makes it ideal for “pump and dump” schemes—where the value of stocks is artificially inflated through false or exaggerated claims—evolving in the age of social media.
The Salasar Techno incident was no outlier. Such campaigns are increasingly common, with no indicator that these endorsements are sponsored. However, while such practices are fairly common (even if frowned upon) when it comes to products and services, it is tantamount to stock market manipulation when it comes to stocks.
Markets regulator Sebi is already cracking down on the phenomenon.