I constantly receive spam messages that contain false information about companies and their forecasted stock value. One day I started to wonder if these emails actually lead to anyone netting a profit as a result of the spam.

After starting to searching online for an answer to my questions I found an archive of an interview titled “Penny-Stock Spam Yields Profits — for Some” on NPR. In which the speaker talks about how spammers make their money by buy large quantiles of a stock and then use the “pump and dump” technique to make their money. First they pump the stock by sending out the spam email which encourages people to buy the stock and then they dump by selling their stock to the recipients that they baited. They make money because they sell the stock at a higher price than they bought it at and the poor spam recipient is left holding stock that they usually can’t sell and have lost money on.

If you want to learn more you can read the paper titled “Spam Works: Evidence from Stock Touts and Corresponding Market Activity” that the speaker and others have published.

After reading the paper and listening to the interview it does make me wonder what would happen if someone would have a computer program that could purchase a stock as soon as a piece of spam was received. Then issued a limit order to sell the stock when it rose a few pennies. This is interesting, but way to risky for my tastes.