Shares of radio-frequency identification solutions provider Impinj (NASDAQ: PI) surged on Thursday. There was no news driving the rally. With the stock down nearly 50% since late June as of close on Wednesday, shares may have simply fallen too far too fast. At 2:30 p.m. EDT, Impinj stock was up about 11.5%.
Impinj has taken a tumble over the past couple of months. An analyst downgrade knocked down the stock in June, but the company's second-quarter earnings report earlier this month has been the main driver. While Impinj beat analyst estimates for revenue and earnings, it was forced to slash its guidance due to customer delays.
Impinj had previously provided guidance calling for the total number of IC endpoints (an endpoint is a chip connected to an individual item) shipped this year to be in the range of 7.8 billion to 8.0 billion. Because several large customers delayed roll-out expansions, Impinj now expects to ship between 7.0 billion and 7.2 billion IC endpoints. That represents just 18% growth at the midpoint.
That guidance cut sent the stock into a tailspin, but investors may have overreacted. The surge on Thursday may simply be a correction to that overreaction. Impinj still has plenty of long-term growth potential, and the company believes that five major customers in Japan alone could eventually consume 100 billion endpoints annually if they roll out the technology widely. While 2017 won't be a great year for the company, the future looks much brighter.