What happened
Shares of Tandem Diabetes Care (TNDM 0.43%) were jumping 12.9% higher as of 3:51 p.m. EDT on Tuesday. The gain came after S&P Global announced that the stock would be added to the S&P MidCap 400 Index effective Sept. 20.
So what
There's one big advantage that mid-cap stocks obtain from being added to the S&P MidCap 400 Index. Any mutual fund or exchange-traded fund that tracks the index must add the stocks to their holdings.
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That's the main reason Tandem enjoyed a boost today. Investors liked the extra attention that the company will now receive from funds. However, any positive momentum for the stock from its addition to the MidCap 400 should only be temporary. Once funds have bought shares of Tandem, the catalyst will be over.
Now what
What really matters for Tandem is the sale of its insulin pumps. The good news for investors is that the company generated record sales in the second quarter thanks to rapid growth in the U.S. market. Even better, it is only in its early stages of penetrating the international market.
