Why AppHarvest Shares Jumped 12.2% Today

Shares of farming company AppHarvest (NASDAQ:APPH) jumped as much as 12.2% in trading on Monday as growth stocks came back in favor. Shares closed trading up 9.5% for the day.

So what

There weren’t any press releases out today or big news about AppHarvest, but that didn’t stop shares from climbing sharply. A big reason is that the Nasdaq Composite jumped 1.6%, and as a volatile stock, it’s not unusual for AppHarvest to magnify the market’s gains. Growth stocks also performed well, and that was a tailwind.

Indoor farming of tomatoes. g.foolcdn.com/image/?url=https%3A//g.foolcdn.com/editorial/images/640426/indoor-farm-growing-tomatoes.jpg&w=1000&op=resize 1000w, g.foolcdn.com/image/?url=https%3A//g.foolcdn.com/editorial/images/640426/indoor-farm-growing-tomatoes.jpg&w=2000&op=resize 2000w”/>

Image source: Getty Images.

The jump in shares could also be a correction from dropping nearly 30% after earnings were reported earlier this month. Investors should be expecting a long time horizon for AppHarvest to live up to lofty growth expectations, and a disappointing report sent shares sharply lower. But investors with a much longer view might be seeing this as a buying opportunity.

Now what

If we’ve learned one thing about AppHarvest this year, it’s that the stock will be volatile and meaningful production will take longer than expected. Management continues to grow the company’s footprint and increase the output of vegetables, but it’ll take many years to build a real market. Long term, I see this as a growth stock with a lot of potential, but until we see better revenue and margins, I’ll be watching from the sidelines.

This article represents the opinion of the writer, who may disagree with the official recommendation position of a Motley Fool premium advisory service. Were motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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