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Why Ideanomics Stock Is Skyrocketing Today

By Chris Neiger - Nov 23, 2020 at 11:26AM

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Investors pushed the stock astronomically high on the company's latest investment news.

What happened

Shares of Ideanomics ( IDEX -6.76% ) are soaring today after the company announced that it's investing more money into the electric tractor company Solectrac.

The tech stock was up by an eye-popping 87% early today, and settled to a 57.1% gain as of 11:32 a.m. EST.

So what

Ideanomics said in a press release today that the company is making an additional $1.3 million investment in Solectrac. This investment comes on the heels of an initial investment that Ideanomics made in the company at the end of October. 

Light blue arrows on a dark blue background.

Image source: Getty Images.

Ideanomics' original investment gave it a 14.7% stake in Solectrac, and the new investment bumps its ownership in the company up to about 22%, once everything is finalized.

Investors were excited to see the company expand further into this space, likely because Ideanomics estimates that electric tractors will "disrupt the $75 billion global agricultural tractor industry."

Alf Poor, the CEO of Ideanomics, said in the press release, "We believe Solectrac has enormous potential and, given the uptick in both product inquiries and investment interest they are seeing, we exercised our rights to increase our stake so we can help Solectrac scale to meet anticipated market demand."

Now what

A company nabbing a larger stake in another company is significant news. But Ideanomics' announcement doesn't appear to justify the meteoric rise of its stock price today. The stock has taken some wild swings over the past year (and over the past several years, for that matter), and today's massive jump should be more of a warning sign for some investors, rather than cause for celebration. Just as it did last week, this stock appears to move on simple press releases.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Ideanomics, Inc. Stock Quote
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