Shares of 3D-printing company Stratasys (NASDAQ:SSYS) were up sharply on Monday, rising about 10% on the day. The stock had sold off with virtually every other stock in the COVID-19 market crash. But since March lows, it's recovered around 45%.
So why was the stock up today? There's no news that explains Stratasys' move, but we can make an educated guess by eliminating some of the usual suspects.
First, today's move isn't news related. Last week, Stratasys announced an agreement with 3D-printing rival Origin to market millions of nasopharyngeal swabs for COVID-19 testing, but financial terms weren't given. And in March, the company organized over 150 organizations to manufacture face shields for coronavirus protection. These moves are welcome in the fight against the virus, but there's nothing new today that suggests this will be lucrative for Stratasys.
Second, today's jump isn't related to underlying fundamentals. This morning, Stratasys did announce the date for its first-quarter 2020 results. It will update investors with a conference call before the market opens on May 14. But it didn't give any hint on what its financials might look like.
Finally, this isn't likely the result of a short squeeze. To keep it simple, the fewer "days to cover," the greater the odds of a short squeeze. It's not uncommon for highly shorted stocks to fall to just a few days to cover. With Stratasys, there are 9.2 million share sold short, which is around 17% of shares outstanding. But there are still 13.7 days to cover, according to data from Nasdaq. That's not a ton of time, but still enough to assume shorts can cover their positions without causing a squeeze.
However, it's noteworthy that today it's trading higher than other 3D-printing companies like 3D Systems and Proto Labs, indicating there's at least something to Stratasys' move. Perhaps investors see a rebound with technology stocks in general, and Stratasys could be viewed as the most undervalued of the bunch. Even after today's move, the stock trades below book value, unlike its peers.
So what's an investor to do when a stock like Stratasys makes a huge move like this without any substantial news? The only thing that can be done is to go back and remember why you either like or don't like the company in the first place. Try to think past one-day moves, and think toward the trends that will propel shares either higher or lower over the years to come.
We can't always explain away the daily moves. But at the risk of sounding dogmatic, there's always an underlying reason for long-term moves. Learning to uncover those fundamental reasons will make you a better investor.