Why Poet Technologies Stock Plummeted Today
Key Points
Shares of Poet Technologies soared on Wednesday on news of an upwardly revised price target.
Marvell is acquiring optical connectivity specialist, Celestial AI.
Growth stocks often exhibit significant volatility.
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While shares of Poet Technologies (NASDAQ: POET) stock have surged higher throughout the week, investors are slowing their buying activity today. Lest investors fear that the company, a designer of optical engines, had some troubling news to report, there was no such thing. In fact, there appears to be no apparent cause for the stock's decline.
As of the market's close, shares of Poet Technologies fell 5%.
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Ode to a young, growth stock
Unlike blue chip stocks that are resilient and don't often fluctuate wildly, growth stocks such as Poet Technologies frequently exhibit significant volatility -- a dynamic that's on full display this week. On the one hand, shares jumped on Wednesday when investors learned that Northland had increased its price target on Poet Technologies' stock and that Marvell planned to acquire Celestial AI, a company that designs an optical connectivity platform suited for artificial intelligence (AI) computing.
Today, however, shares sank for no apparent reason. Despite the market's generally bullish mood (the S&P 500 was up 0.2% today), investors likely clicked the sell button, deciding that they were content to collect profits.
Are investors wise to write Poet out of their portfolios now?
While Poet seems to be on a roller coaster these past few days, the reality is that if you were bullish on Poet's prospects when the week began, you should be just as optimistic today. The stock's rapid rise and fall throughout the week is unsurprising, considering the company is in the early innings of its development as a developer of connectivity solutions for AI infrastructure. Today's drop in the stock price, therefore, should not carry significant weight in the eyes of long-term investors.
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Scott Levine has no position in any of the stocks mentioned. The Motley Fool recommends Marvell Technology. The Motley Fool has a disclosure policy.
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