Learn the telltale signs of pump-and-dump schemes before you become the exit liquidity.
A pump-and-dump is one of the oldest stock market scams. Promoters artificially inflate a stock's price through misleading statements, hype campaigns, and coordinated buying — then sell their shares at the peak, leaving regular investors holding worthless stock.
Stage 1: Accumulation. Insiders quietly buy large positions in a low-volume, cheap stock. These are almost always penny stocks or micro-caps trading under $5.
Stage 2: The Hype Machine. Promoters blast email newsletters, social media posts, YouTube videos, and paid articles. You'll see phrases like "the next Tesla," "ground-floor opportunity," and "1,000% upside." Some hire social media influencers or create fake "research reports."
Stage 3: The Pump. As retail investors pile in, volume surges and the price spikes. This creates a feedback loop — more price movement attracts more buyers, which pushes the price higher.
Stage 4: The Dump. Once the price hits the target, insiders dump their shares. Volume spikes on the way down. By the time most investors realize what happened, the stock has crashed 80-95%.
Our AI automatically flags pump-and-dump indicators: suspicious volume patterns, CEO backgrounds, paid promotion campaigns, and reverse split history. When you see a RED score with leadership concerns, pay attention.
If an investment sounds too good to be true, it is. Legitimate companies don't need email spam campaigns to attract investors. Stick to companies with real revenue, real products, and management teams with clean track records.