American Superconductor (NASDAQ: AMSC) jumped to $21 at one point earlier this week. It’s now back down to around $9. And we did tell you this was going to happen too. For while there is excitement about superconductors right at present they’re not American and they’re most certainly not owned by American Superconducctor - even if the new one, LK-99, does turn out to exist.
But then we did tell you this about American Superconductor: “American Superconductor (NASDAQ: AMSC) is up 121% premarket on the back of what we think is a bit of nominative indeterminism. That is, people are diving in because of the name and the fuss about superconductors. But the truth is that AMSC has no interest in - it doesn’t own any of - this new superconductor if it does exist. Quite the opposite in fact, if the new room temperature superconductor does exist then this will do significant damage to American Superconductor’s line of business. As it will to pretty much every extant operator in the electricity distribution business.
The background here is excitement over a new scientific claim. And we really do need to call it a claim at this point, not a fact: “LK-99, a lead-based compound, is purportedly a room-temperature, ambient-pressure superconductor. Such a material, which conducts electricity without any resistance under normal conditions, could have huge implications for energy generation and transmission, transport, computing and other areas of technology. The papers have sparked wild enthusiasm online, and several efforts to replicate the work. At the same time, there are reports of disputes among the Korean researchers over whether the research should have been released at all.”
The idea of a room temperature superconductor is terribly exciting. It’s just that it has nothing at all to do with the company American Superconductor.
American Superconductor stock price from Google Finance
You might be surprised how often this srot of things happens, moves of excitement getting whipped up for no reason at all. The classic case was when Zoom soared in lockdown. An OTC stock with the ticker ZOOM went up 50,000% or something. Entirely unrelated to the Zoom that actually ran Zoom of course. And the important thing is that having zoomed up like that it zoomed right back down again.
So too here. The excitement about superconductors is real and out there. That all has nothing at all to do with the stock AMSC. Which is why after that burst of enthusiasm the stock is back down to about where it started. Such frenzies are terribly fun if we get on the right side of them. But we do, always, have to remember that they are just frenzies and they’ll fade away.
