Why ChinaCache International Holdings Ltd. Shares Skyrocketed

Is ChinaCache's jump meaningful? Or just another movement?

Feb 19, 2014 at 7:52PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: In the absence of any significant positive news, shares of ChinaCache International Holdings, Ltd. (NASDAQ:CCIH) rose another 20% Wednesday.

So what: Shares are have jumped more than 40% over the past two days alone, and today's move came on more than twice ChinaCache's average volume. Even so, remember these kinds of wide swings aren't entirely uncommon as large market players step into and out of small companies like ChinaCache, the entire market capitalization for which still stands under $500 million after the pop.

On that note, ChinaCache did announce a "memorandum of understanding" with Server Farm Realty last Thursday, through which the two companies will collaborate on helping multinational businesses host their cloud services in China. That could be great news for ChinaCache, which is working hard to position itself at the forefront of developing the country's fast-growing data center industry.

Now what: However, I still think investors should tread lightly here, and prefer to let the dust settle a bit before making any long-term decisions. As it stands, I'm perfectly happy waiting for more color on its progress toward sustained profitability when the company reports fourth quarter results on March 12.

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Steve Symington has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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