Shares of online postage company Stamps.com (Nasdaq: STMP) soared more than 30 percent on Friday, climbing 8-7/16 to 36, as rumors began to circulate about the company’s technology being approved by the U.S. Postal Service. Even if Stamps.com is on the cusp of approval, this one-day run up seems like a little much.
After all, investors who bought into Stamps.com, as well as the underwriters who took the company public, obviously are already counting on the fact that approval is pretty much a done deal. The entire company would almost certainly crumble if its technology wasn’t approved. A lot of the rise in Stamps.com on Friday was probably due to momentum investing.
Don’t be surprised to see a pullback in the stock, even if the technology is approved.