One of today’s more interesting movers to follow is Vast Renewables (NASDAQ:VSTE). Shares of this little-known player in the energy storage market are absolutely skyrocketing, with VSTE stock up more than 140% at the time of writing. Notably, the stock had been up nearly 200% at its peak today, so a near-tripling in the span of intraday trading is something that’s going to catch investors’ attention.
Like other small-cap stocks with relatively small floats, such moves aren’t necessarily uncommon. However, it’s the first notable such spike for this stock in months, and is disproportionate in both its scale and the volume of shares that have traded hands today. At the time of writing, nearly 18 million shares of VSTE stock have changed hands. That’s compared to an average daily trading volume of around 14,000 shares.
Let’s dive into what may be behind this more than 1,000x in trading volume today, and whether this is a stock worth considering on this move.
Why Is VSTE Stock Up Today?
Lacking any apparent or obvious catalysts to drive such a move, there are a few key reasons why Vast Renewables could be seeing the kind of move it is today.
For one, the rise of algorithmic trading and various momentum strategies can be partly responsible for such moves. As a stock heads higher and gains intraday momentum, programs can be set up to buy shares at ever-higher prices to profit from the momentum. When a smaller-cap company with a very small float and a high bid-ask spread is targeted (such as in this case), massive moves can take place in short amounts of time.
In certain cases, it’s really a matter of supply and demand. Greater demand for shares of a company that isn’t as liquid (only a small fraction of the company’s shares actively trade) can mean that any sort of surge in buying pressure leads to such moves. Of course, when these momentum strategies and algo traders look to offload their positions, such stocks tend to come tumbling back down to earth.
Likely a One-Day Speculation
No doubt, some retail investors may be getting caught up in the fray and contributing to today’s move. But it’s my view that this surge is likely to represent more of a one-day move than a sustained fundamental rise with any sort of support. Thus, this is a stock I’m going to steer clear of, but I will certainly be following for any updates moving forward.
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On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
