What happened
Shares of Westport Fuel Systems (WPRT 1.57%) stock exploded as much as 10% higher on Wednesday before finally closing the day up a still respectable 9.7%. That's pretty amazing -- but here's the really crazy thing:
There doesn't seem to have been any reason whatsoever for the stock going up so much. No analyst upgraded Westport stock yesterday. The company didn't report earnings, and in fact issued no press releases of any kind. For that matter, Westport last reported earnings two months ago, which means we don't expect to get any more earnings news out of the company for about another month.
If enough people pull together, a stock can go up for no reason at all. Image source: Getty Images.
So what
So what's the reason for Westport stock going up so much yesterday? Honestly, there doesn't seem to have been one -- but even that fact is worth keeping in mind:
Sometimes in the stock market, stocks go up for no reason, and then they keep going up more because investors see the momentum, and assume (wrongly) that there's something behind the move. (The converse is also true. Panic can become a self-fulfilling prophecy just as much as irrational exuberance can).
Now what
This can be especially true for companies like Westport which, lacking profits -- or any reasonable expectation of earning a profit in the near future -- are difficult to value by such traditional methods as P/E analysis. Lacking such an accepted means of determining their value, companies like Westport are more susceptible to being valued based on whatever the market seems to think they're worth on a given day.
