Why SolarCity, Ballard Power Systems, and Sears Holdings Tumbled Today

The sell-off on Wall Street continued Monday, as investors continued to flee from high-flying stocks in search of safer investments. Without any major economic data releases today, investors were left looking forward to an earnings season that some expect to be particularly ugly given the harsh winter conditions. Yet some of the worst losses of the session were reserved for SolarCity (NASDAQ: SCTY  ) , Ballard Power Systems (NASDAQ: BLDP  ) , and Sears Holdings (NASDAQ: SHLD  ) .

Source: SolarCity.

SolarCity dropped 8% as more investor lawsuits piled onto the solar company, this time from an entity called the Shareholders Foundation. Yet the more likely cause of SolarCity's decline is simply that investors aren't convinced that the solar innovator can live up to the promise that its current valuation implies. Still, bulls can point to the fact that SolarCity has created a way to finance its operations through the sale of solar bonds, with SolarCity having announced its second sale of about $70 million in bonds last week. Barring a full-scale recession, the residential solar industry in the U.S. continues to look bright, and when you also consider the possibility of SolarCity battery technology finding applications in other industries, shares look like a potential bargain if the pullback continues.

Ballard Power Systems fell 9% in the aftermath of Plug Power's (NASDAQ: PLUG  ) purchase last week of a third-party maker of fuel-cell stack technology. The deal calls into question whether Ballard Power Systems can continue to rely on its partner as a growing customer, and with Plug getting so much attention from investors for recent contracts and others it says it should get in the near future, it's easy to understand why Ballard Power Systems stock is taking a hit in the general flight from high-flying, high-risk stocks. Yet to its credit, Ballard Power Systems has a well-diversified client base, with Plug making up just over 10% of Ballard's overall revenue. While Ballard might be vulnerable elsewhere, Plug's success or failure won't make or break the company.

Finally, the price of Sears Holdings stock plunged by 24%, but the bulk of the drop came because of the retailer's spinoff of Lands' End, which began trading independently today after Sears completed the transaction Friday night. For its part, the spinoff didn't perform all that well either, with the stock closing nearly $1 per share below where it opened the day. For Sears Holdings investors, though, the move simply represents the latest corporate-restructuring move that CEO Eddie Lampert has used to try to unlock value from the ailing retailer. In the end, many investors are skeptical whether there'll be anything left of Sears Holdings at the end of the day. But even if the stock eventually goes to zero, it looks likely that Sears Holdings will leave a trail of successor companies in its wake.

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  • Report this Comment On April 07, 2014, at 9:31 PM, ronwiserinvestor wrote:

    The solar lease and PPA companies can sell all the bonds they want. Consumers are smarter today. Paying a much lower price (sub $3.00 a watt) for a solar system while retaining the 30% federal tax credit and cash rebate instead of giving these incentives away to some solar leasing company whhile getting a $0 down solar loan with tax deductible interest absolutely trumps the solar lease and PPA company's expensive offerings.

  • Report this Comment On April 23, 2014, at 5:50 PM, davidscott1 wrote:

    Plug Power has been one of the best-performing stocks in terms of stock price appreciation from the

    start of this year. http://goo.gl/65ZLcf

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