China SXT Pharmaceuticals (NASDAQ:SXTC) stock is rocketing higher on Monday despite a lack of news from the pharmaceutical company.
The Chinese pharmaceutical company hasn’t released any new news or filings that explain today’s rise. On that same note, there’s no new analyst coverage of the stock that would act as a catalyst for today’s rally.
Even so, shares of SXTC stock are seeing incredibly strong trading on Monday morning. As of this writing, more than 21 million shares of the stock have changed hands. That’s a massive surge compared to its daily average trading volume of about 450,000 shares.
With all of this movement, traders might be tempted to take a stake in China SXT Pharmaceuticals. However, they should note the company’s prior closing price of 15 cents and market capitalization of $1.567 million. Both of these firmly set SXTC as a penny stock.
Why This Matters For SXTC Stock
Penny stocks are extra risky to invest in as they can be overly volatile. That’s due to the low stock price, trading volume, and market capitalization making these stocks easier to manipulate. That could be what’s happening to shares of SXTC stock this morning.
If that’s the case, investors will want to be careful about taking a stake in the company. While the shares are up now, it might now be long before retail and day traders abandon the stock. When they do, the price is likely to come crashing back down.
SXTC stock is up 110.1% as of Monday morning.
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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
