What happened

Shares of RFID tracking specialist IMPINJ (NASDAQ:PI) rose 16.5% in May 2017, according to data from S&P Global Market Intelligence.

So what

Impinj reported strong first-quarter results on May 4, sending share prices as much as 16% higher the next day. The company reported a small adjusted profit where Wall Street had expected a small loss, while sales rose 47% year over year.

That surge faded somewhat, only to be reinforced by bullish analyst notes on three separate occasions.

Extreme close-up of an RFID tag.

Image source: Getty Images.

Now what

The RAIN radio-frequency identification system that forms the core of Impinj's operations is an industry standard aiming to insert RFID tracking into a plethora of everyday items and situations. Hardware costs have come dramatically in recent years, opening up a case for a commensurate explosion of RFID-tracked items.

The addressable market is huge, numbering in the trillions of potential RFID-connected items according to analyst firm RBC Capital. The market is growing quickly in some surprising places, such as clothing retailers and convenience stores tracking their inventories with RFID tags. Hospitals want to use RFID technology to check patients in and out faster, with easy access to complete digital charting along the way.

Impinj addresses every part of this exploding market, from RFID hardware tags to tracking software and networked data analysis tools. Given this rapidly evolving target market, it's not surprising to see Impinj shares having gained 167% since last summer's IPO. The company may look expensive by traditional measures but intense growth is valuable too and sometimes you get what you pay for.

PI Chart

PI data by YCharts