A123 Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: A123 Systems (Nasdaq: AONE  ) shares got pummeled today, falling 12% after the company released earnings.

So What: The battery business is tough to predict, so I wasn't totally surprised when revenue only rose 11% to $26.2 million, and the net loss reached $43.7 million. However, investors weren't expecting management to announce a two-quarter delay in expected increases in auto demand.

Now What: Automakers were supposed to start ramping up production in the fourth quarter, and A123 anticipated that demand would pick up in the third quarter this year. Now those plans have been pushed back, and no one knows whether we'll see more delays next year. I'm definitely not buying the move today, but further weakness in the stock could be a buying opportunity. After all, demand will eventually pick up ... won't it?

Interested in more info on A123 Systems? Add it to your watchlist.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

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  • Report this Comment On November 10, 2010, at 9:33 PM, Borisbmx wrote:

    gee management is really skrewing the stockholders. They knew about this delay for months and were not transparent. They should have their pay cut 80% or be terminated, president first.

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