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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: Shares of battery manufacturer Advanced Battery Technologies (Nasdaq: ABAT ) were off nearly 14% in intraday trading as investors reacted to a share sale by the company.
So what: The rechargeable battery industry has been spurred on by the hope that electric vehicles will continue to gain traction around the world. Rapid expansion, however, isn't free, and Advanced Battery shareholders are seeing the price today as the company raised new capital to put toward expanding its manufacturing facility and making acquisitions. The $30 million worth of new shares were sold at $4.00 -- a 7% discount to the previous closing price -- and included warrants to buy additional stock at $4.00.
Now what: A drop is pretty typical when a company sells new shares at a discount, but the real question is whether the company will be able to put the new money to good use. If it's able to invest the new funds in projects and acquisitions that have significant payoffs of the long run, the share sale -- discount or not -- could be a long-term positive. Of course, that's not a given. An Associated Press article today expressed concerns over the near-term speed bumps that Advanced Battery -- along with fellow battery makers A123 Systems (Nasdaq: AONE ) and China BAK Battery (Nasdaq: CBAK ) -- may be facing as the industry deals with question marks over the market for electric vehicles.
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