Shineco (NASDAQ: SISI) stock is up 53% this morning. We take this to be nothing serious, rather just one of those little bouts of speculation in a low float microcap. If it’s located in China, where we get very little up to date information, all the better. For that does make it easier to create a little flurry of buying and given very thin markets that’s all that’s required to move the price considerably. For a short period of time that is.
What’s done at Shineco: “Shineco, Inc., through its subsidiaries, produces, distributes, and sells health and well-being focused plant-based products in the People’s Republic of China. The company also develops, manufactures, and distributes specialized fabrics, textile products, and other by-products derived from an indigenous Chinese plant called Apocynum Venetum. In addition, it plants, processes, and distributes green and organic agricultural produce, as well as grows and cultivates Chinese yew trees;” Well, OK. And how many of us are going to be able to work out anything at all, let alone the prospects for, the Chinese market for yew trees? Quite, all a bit of a black box really.
Shineco stock price from Google Finance
Now it’s true that the information flow out of China - especially in English - is not good. So it is possible that something’s happened that neither we nor the press more generally know about. There have been some recent-ish stories. A cardiac test gets approved in China a month back. A cooperation agreement two months back. A NASDAQ delisting warning in March.
No, we don’t see any of those as pumping the Shineco stock price 50% and more today. So, we run with the idea that it’s just one of those things. In a microcap (even at this price, under $5 million market capitalisation) it doesn’t take much buying to start off a momentum trade. So, some buying - which either by chance or design sets off that momentum trade - and off the SISI stock price goes. The question is always how far will it go? Because the thing about such momentum trades is that they do end.
Our best guess here is that - in the absence of new information - it’ll end pretty soon. Like today. But note that that is a guess.
