What happened

Shares of Zomedica (ZOM -0.08%) fell 10.5% Tuesday, furthering the decline in the veterinary health company's stock price over the past week.

So what

Zomedica's shares have shed roughly 28% of their value since the company announced the first sale of its Truforma system on March 16. The diagnostic platform for dogs and cats is Zomedica's first commercial product. Investors have high hopes for its potential to help veterinarians deliver better healthcare to pets -- while fueling Zomedica's revenue and profit growth along the way.

A person is pointing to a stock chart that rises sharply and then falls.

Image source: Getty Images.

Zomedica first announced its plans to commercialize Truforma back on Nov. 13. In the months that followed, traders bid up the company's stock price by a staggering 2,600%. After such a massive move, many investors apparently decided to take profits upon news of Zomedica's first sale.

Now what

Zomedica's recent stock price movements appear to be a classic "buy the rumor, sell the news" event. Traders on Reddit and other social media sites have hyped Zomedica's growth prospects in recent weeks, which has helped to propel the huge surge in its stock price.

Although Truforma could capture a significant share of a pet diagnostics market that's projected to reach $2.8 billion by 2024, Zomedica's stock price may have simply come too far, too fast. The company's announcement of its first sale likely helped remind investors of just how small its current revenue base is, as well as the risks of investing in an early-stage growth company, and they decided to take some of their winnings off the table.