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SDM Stock News: Inside the Latest Penny Stock Pump-and-Dump Debacle

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Written by Timothy Sykes Reviewed by Ben Sturgill Fact-checked by Jeff Zananiri
Updated 9/29/2025, 1:11 pm ET 9/29/2025, 1:11 pm ET | 6 min 6 min read
SDM Stock News: Inside the Latest Penny Stock Pump-and-Dump Debacle Thumbnail

Smart Digital Group Ltd. (NASDAQ: SDM) just reminded everyone why I preach risk management with penny stocks. After a multi-month hype cycle into the teens, SDM collapsed ~85% in minutes and closed near $1.85—a classic blow-off top followed by a rug pull.

It’s now stopped trading through most brokers, with a “news pending” halt.

Join my free webinar to learn how to spot these scams before they destroy your account.

I’ve traded and taught through these cycles for 20+ years. This pattern isn’t new. It’s the same rinse-and-repeat I cover in my 7-Step Pennystocking Framework—parabolic run, thin float, chat-room hype, then panic and silence.

How the SDM Scam Worked

Forget the rumors, theories, and chat screenshots. Only price pays. When a low-float penny stock goes vertical on vague “partnerships” and then loses 80–90% in minutes, the trade is over. That’s your signal—not a Reddit thread, not a rumor, not hope.

  • Big spikes without substance are exit liquidity for insiders and promoters.
  • When the chart breaks, get out. No heroics.
  • If trading is paused for “news pending,” it’s not bullish by default—wait for the filing, then let price/volume confirm.

Why SDM Looked Like a Textbook Pump

  • Sudden liquidity: a previously thin name “discovers” nine-figure dollar volume out of nowhere.
  • Hype > financials: buzzwords and aspirational roadmaps instead of audited, material revenue progress.
  • Off-platform promotion: WhatsApp/Telegram/X “analyst tips” pushing price targets, not risk.

That’s the same setup I broke down with CLEU and JYD. Different ticker, same trap.

If you want to train your eye to spot tops before they implode, start here:

More Breaking News

“But Tim, Is SDM Legit?” — What My Inbox Looked Like

I received a flood of emails like these (lightly edited for privacy):

“I and some of my friends have invested heavily from a WhatsApp recommendation. Is this a legitimate company and will the price come back?”

“Were you aware the pricing related to SDM was due to a pump and dump scheme that’s left hundreds of people out of pocket?”

“I bought around 13.3 from a group. Should I hold or sell? Will it rise back to 14?”

I can’t respond to every message individually. If you’re serious about learning exactly how to avoid this and how I trade around the madness, join my Trading Challenge so I can teach you properly.

Lessons You MUST Take From SDM

Here’s a checklist of knowledge you’ll need to navigate the next penny stock scam.

  • Spikes without substance end badly. If a stock is up 200–300% on vague headlines, you are the liquidity.
  • Cut losses quickly. Hope is not a strategy. If the tape breaks, get out.
  • Trade the setup, not the story. Verify filings, liquidity, catalysts. Ignore chat-driven “tips.”
  • A “News Pending” halt just pauses trading until a statement drops. Sometimes clarification = relief bounce; sometimes it confirms the worst. 
  • Don’t guess. Wait for the filing, then for price + volume to confirm. Fresh resumes can trade like broken IPOs—wide spreads, fake bids, trap halts.

Final Thoughts: Don’t Be the Next Bag Holder

SDM’s crash isn’t an anomaly—it’s the pattern. Whether the company blames “clerical confusion” or something else, your education doesn’t change:

Learn the anatomy of a pump. Respect your stops. Let the chart—not the chat—lead you.

If SDM hit you, I’m sorry. Use the pain. Get disciplined. Study the patterns. And if you want me in your corner day-to-day, apply to my Trading Challenge and let’s fix your process:

Join my free webinar to learn how to spot these scams before they destroy your account.

Don’t be the next bag holder. Be the trader who profits from the pump—before the dump.

This is stock news, not investment advice. Timothy Sykes News delivers real-time stock market news focused on key catalysts driving short-term price movements. Our content is tailored for active traders and investors seeking to capitalize on rapid price fluctuations, particularly in volatile sectors like penny stocks. Readers come to us for detailed coverage on earnings reports, mergers, FDA approvals, new contracts, and unusual trading volumes that can trigger significant short-term price action. Some users utilize our news to explain sudden stock movements, while others rely on it for diligent research into potential investment opportunities.

Dive deeper into the world of trading with Timothy Sykes, renowned for his expertise in penny stocks. Explore his top picks and discover the strategies that have propelled him to success with these articles:

Once you’ve got some stocks on watch, elevate your trading game with StocksToTrade the ultimate platform for traders. With specialized tools for swing and day trading, StocksToTrade will guide you through the market’s twists and turns.

Dig into StocksToTrade’s watchlists here:

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Tim Sykes

Head Writer at TimothySykes.com, Lead Mentor at the Trading Challenge
In his 20-plus years of trading, Tim has made $7.9 million. In his 15-plus years of teaching, Tim’s Trading Challenge has produced over 30 millionaire students. His philosophy emphasizes small gains and cutting losses quickly.
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* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”