AgriFORCE Growing Systems (NASDAQ: AGRI) stock was up 10% yesterday. Then another 50% premarket today. That’s as they say, a pretty big price change. And big price changes can really only be driven by two things. One is some stunning piece of news, something that radically changes the prospects for the company.The other is some burst of enthusiasm for the stock which is not being driven by any such piece of important news. We’re tending toward the second here. And the implication of that is that it will fade back soon enough.
As to what’s done at Agriforce: “AgriFORCE Growing Systems Ltd., an agriculture-focused technology company, focuses on the development and commercialization of plant-based ingredients and products that deliver healthier and nutritious solutions. The company operates in two divisions, AgriFORCE Solutions and AgriFORCE Brands. It also offers management advisory services and holds intellectual property, as well as engages in the real estate holding and development activities.” Better plant foods seems like a sensible enough business. After all, we’ve been trying - and succeeding in - to increase farming yields for 8,000 years now. The real estate segment, well, that might cause a little more hesitation.
The problem we’ve got with this AGRI stock price rise is that there isn’t that grand piece of news to justify it. Therefore we do rather just assume that it’s a bubble of enthusiasm caused by some initial buying.
It’s not that uncommon, some buying in a low liquidity microcap raises the price, other traders spot that and so buy in in order to ride the momentum. Which is fine, speculation is all a part of the markets. It’s just that a momentum trade based upon nothing but momentum will end. And it’s impossible to know when that’s going to be.
We assume this price rise will fade back. What we’re not sure about is upon which time scale.
