What happened
At one point in the first 90 minutes of trading on Wednesday, Pitney Bowes (PBI +0.63%) stock price was up by 11%. At another, it was down about 29%. And at just past noon EST it was off by 22%. And that's still small potatoes, since the stock rose by around 50% on Tuesday.
That's a huge amount of volatility in a very short period of time. Yet no news of material note came out of the company.
So what
Even after all of the ups and downs, Pitney Bowes shares are still up an impressive 60% or so over the past five days. Analysts are expecting to see a 35% year-over-year earnings decline for the fourth quarter when it reports in early February. And other than a holdings update from BlackRock, which looks like it is related to the asset manager's exchange-traded fund business, there doesn't appear to be anything that would justify the recent price action here.
Image source: Getty Images.
However, Wall Street doesn't need hard news to get into a frenzy about a stock. Anyone needing a reminder of that can find one in the many headlines about short squeezes that have sent certain companies' shares on wild rides in recent days. GameStop is the poster child for that type of crazy price action.
It's highly likely that this is what's going on with Pitney Bowes as well. The problem is that short squeezes are largely driven by whim and emotion, and stocks can turn on a dime, both higher and lower. For more conservative types, periods like this can be highly troubling even if they are short-lived.
Now what
It's hard to ignore when a stock's value ricochets by nearly 33% from high to low in a scant 90 minutes (or 50% in a day, as happened Tuesday). But investors probably shouldn't attempt to read too much into the price moves at Pitney Bowes right now. This looks like a short squeeze feeding frenzy, and not something that should drive anyone's long-term investment decisions.
