Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Impinj Dropped Today

By Timothy Green – Updated Jun 9, 2017 at 4:11PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Technology stocks are selling off, and Impinj got caught up in the panic.

What happened

Shares of radio frequency identification solutions provider Impinj (PI -3.02%) tumbled on Friday. There was no company-specific news, so it appears that the stock simply got caught up in the technology stock sell-off that sent a wide variety of tech stocks plunging. Impinj stock was down 14% at 3 p.m. EDT.

So what

The sell-off on Friday has nothing to do with the company itself. Nothing has changed about the story or the fundamentals. Impinj is not a cheap stock, trading at a high single-digit multiple of sales, and that may be the reason why it got hit so hard.

An Impinj graphic.

Image source: Impinj.

Impinj sells RFID chips and solutions built around those chips, allowing industries such as retail, manufacturing, and transportation to track individual objects. The company expects to ship as many as 8 billion units this year, up 32% compared to 2016. As the cost of RFID chips continues to decline, the number of potential applications increases.

Impinj is in the very early stages of growth. Like any small technology company, there are no guarantees that it will reach its full potential. But a one-day broad-based stock-market sell-off is not a reason to change your mind on the stock.

Now what

Impinj announced its first-quarter results on May 4, so it will be a couple of months before investors get another update on the company's progress. Impinj will need to continue growing revenue at a brisk pace, while moving toward profitability, in order to keep investors happy. With the stock dropping so much on Friday, those who already own it have an opportunity to pick up some more shares at a lower price.

Timothy Green has no position in any stocks mentioned. The Motley Fool recommends Impinj. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.