Why did ASX 300 healthcare stock Polynovo tumble 12% today?

Polynovo had a shocker on Wednesday. Let's look at why…

Sebastian Bowen

Author Bio Sebastian Bowen has been a Motley Fool contributor since late 2018. Sebastian found his passion for writing and educating others about shares and all things finance after completing his studies in political, economic and social science and enjoys bringing this passion to life at the Fool. His investment philosophy is a simple one – buying high-quality companies at prices that make sense. When he’s not researching his next investment at all hours of the morning, Sebastian enjoys classic movies and likes to unwind with a good book, newspaper or record. Areas of Expertise Dividend investing ETFs Education Bachelor of Political, Economic, and Social Sciences (Government and International Relations), University of Sydney Social Media X/Twitter Favorite Investment Quote "In the short run, the market is a voting machine, but in the long run, it is a weighing machine." – Benjamin Graham

Published February 8, 2023 4:20 pm AEDT

Overall, it's been a fairly positive day for ASX shares and the S&P/ASX 300 Index (ASX: XKO) this Wednesday. At market close, the ASX 300 gained a healthy 0.36%, putting the index at just over 7,740 points. But let's talk about the massive losses of one ASX 300 healthcare stock – Polynovo Ltd (ASX: PNV)

Polynovo shares evidently did not get an invite to the ASX 300's party this Wednesday. In fact, the healthcare stock plunged by a nasty 12.08% to close at $2.33 a share. That was after the Polynovo share price closed at $2.65 yesterday and opened at $2.68 this morning.

So what went on with Polynovo shares today that elicited this rather horrible share price drop?

A doctor in a white coat sits at her computer with finger on mouth thinking about something in her office with medical equipment in the background. — Image source: Getty Images

Why did ASX 300 healthcare stock Poynovo tank today?

Well, to be exact about it, it's a darn-tootin' mystery.

There was no news or announcements out of Polynovo today. Nor has there been since 17 January.

So we can rule that out.

What we do know, however, is that ASX healthcare stocks were some of the worst-performing shares on the ASX boards today. Indeed, the ASX 200 healthcare sector was the worst-performing sector on the entire market. Other ASX healthcare stocks took a hammering today too, as you might expect.

Ramsay Health Care Ltd (ASX: RHC) shares finished 0.27% lower. Nanosonics Ltd (ASX: NAN) shares lost 1.5%. The Sonic Healthcare Limited (ASX: SHL) share price shed close to 3%, while Healius Limited (ASX: HLS) tanked more than 5%.

So it looks as though Polynovo was just caught up in the wave of pessimism that engulfed most ASX healthcare stocks this Wednesday.

There is another factor to consider as well though. In 2023 so far, the Polynovo share price has risen by a whopping 15.8%. And that's after today's fall.

Over the past 12 months, this company has gained a rather incredible 89%:

When a company has had this much success, especially over a short period of time, investors can tend to get itchy fingers when it comes to taking profits off the table.

This could well be a factor in why Polynovo shares tanked so dramatically today. And selling does often beget more selling. Yesterday saw the Polynovo share price put on an impressive 3.52%. So maybe this was the trigger for investors to start taking some profits.

We can't really know what was behind the Polynovo share price's poor performance on the ASX 300 today. But this scenario is certainly a strong possibility.

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