Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why ShockWave Medical Stock Jumped Today

By Keith Speights - Jan 5, 2021 at 4:24PM

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

No news was good news for the medical device maker.

What happened

Shares of ShockWave Medical ( SWAV -4.29% ) were jumping 9.1% higher as of 3:47 p.m. EST after rising as much as 11.4% earlier in the day. The company didn't announce any news. Today's move appears to have possibly been fueled by institutional investors buying the stock.

So what

It's not all that unusual for a small healthcare stock to experience relatively big price swings on no news at all. Often when this happens, it's the result of major institutional investors such as mutual funds, hedge funds, or pension funds scooping up large quantities of the stock.

Hand holding pen pointing to stock chart on a computer screen.

Image source: Getty Images.

One key reason to suspect that's what is happening with ShockWave is the abnormally high trading volume in the stock this morning. The top 10 institutional investors with positions in ShockWave together own roughly 57% of its outstanding shares. When these investors add to their positions, it can create upward pressure on the stock price. 

What does it mean for regular investors if big institutions are indeed buying ShockWave? On one hand, nothing at all. It's not a good idea to buy or sell any stock just because someone else is, regardless of how much they're investing. On the other hand, rising institutional support is usually a good sign that a company's prospects are strong.

Now what

ShockWave could prove just how strong its prospects are when the company reports its 2020 fourth-quarter results in February. Look for significant revenue growth with the expansion of ShockWave's sales force and its increased U.S. and international market penetration.

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

ShockWave Medical Stock Quote
ShockWave Medical
SWAV
$165.13 (-4.29%) $-7.40

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
640%
 
S&P 500 Returns
139%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/03/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

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