Why Plug Power, Baidu, and National Oilwell Varco Tumbled Today

Stocks rebounded slightly on Monday, although their gains weren't enough to erase larger losses from last Friday's session. Although the dispute between Ukraine and Russia didn't blossom into all-out armed conflict over the weekend, conditions appear to be deteriorating, and many investors remain concerned that escalating rhetoric from the West could lead to economic sanctions that would be more harmful for U.S. and other friendly companies that do business in Russia than for Russian companies and government entities themselves. Even though the broader market salvaged some upside, Plug Power (NASDAQ: PLUG  ) , Baidu (NASDAQ: BIDU  ) , and National Oilwell Varco (NYSE: NOV  ) weren't so lucky, with all three giving up ground in today's session.

Source: Plug Power.

Plug Power fell 14%, adding to its losses from last week after a research analyst argued that the company's fuel-cell technology won't be viable in powering cars that customers will want to buy. Citing factors like a lack of acceleration, the report said competing electric technology from existing companies offers a more attractive combination of performance and efficiency. Although Plug Power's recent success has come largely from corporate customers buying systems for local power generation rather than solely from automakers, the auto market would be a much more lucrative market for Plug Power to target. If it turns out Plug Power's products won't meet customers' needs in the auto world, then it would represent a big step backward for the company.

Baidu dropped 7% on a terrible day for Chinese Internet stocks generally. The Chinese government ordered video-streaming providers like Baidu and several of its peers not to allow episodes of four different U.S. television shows to appear on their websites. With Baidu's video business model relying on its viewers being able to obtain attractive content, the reminder that China will impose its totalitarian requirements on Baidu and other private companies points to a potential slowdown in growth. In addition, one of Baidu's primary competitors reported weak earnings results, casting a shadow on the health of the Chinese Internet industry as a whole.

Source: National Oilwell Varco.

National Oilwell Varco also declined 7% after the oil services provider announced its earnings this morning. Net income rose by 17% on a 9% jump in total revenue, and Varco's rig-technology division posted a 27% higher backlog for capital-equipment orders. Yet those figures weren't enough to satisfy investors who had hoped for even faster growth. Moreover, National Oilwell Varco's announcement that it expects to complete its distribution-business spinoff during the current quarter failed to inspire optimism among investors, even though Varco hopes that the move will help its continuing business lines achieve better profit margins and enhance the value of the shares.

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  • Report this Comment On April 29, 2014, at 1:55 AM, alj177 wrote:

    Plug Power is going first and foremost at the forklift market. That's enormous enough. Everyone is getting way ahead of there selves by range extender talks. Plug will also re-enter back up power systems. These are not as exciting as cars I guess, but it's good business.

  • Report this Comment On April 29, 2014, at 9:08 AM, summerfield101 wrote:

    Uh, does the author know anything about Plug Power? The provided photo is kind of a give away, isn't it, that Plug isn't really aiming to compete with electric automobiles? "lack of acceleration"? Big factor in selecting a forklift? Maybe try spending a minute or two looking into Plug before writing?

  • Report this Comment On April 29, 2014, at 9:37 AM, summerfield101 wrote:

    2nd attempt to post.... Mr. Caplinger, how much do you know about Plug Power? Do you know what their target market is? It doesn't sound like it from what you wrote. PLUG is not trying to compete with electric automobiles. Look at the Plug provided photo. This article is disturbing in it's apparent cluelessness about the subject. This ignorance is pervasive among analysts and journalists. The spread of this ignorance contagion is likely the primary culprit for the price drop. You might try going to the BMW website and viewing the nice video they have on sustainability and how PLUG is meeting this need in the Spartanburg plant in S. Carolina. "BMW Manufacturing Introduces Hydrogen Fuel Cell Material Handling Equipment". Plug will be providing this to Walmart which is the "recent success" you mention.

  • Report this Comment On April 30, 2014, at 11:06 AM, TMFGalagan wrote:

    @summerfield101 - You might want to consider directing your comments to Trip Chowdhry at Global Equities Research, who actually wrote the report I talked about. Even though your points about Plug Power's current target audience are valid, it's apparent that many shareholders had hoped that the auto market might have long-term growth potential for Plug.

    best,

    dan (TMF Galagan)

  • Report this Comment On May 07, 2014, at 10:07 PM, summerfield101 wrote:

    @Dan, gee, where to begin? 1) you are referencing a report that has no basis in reality to begin with. For info on Trip Chowdry, you might google him for an interesting article written last year by a Fortune magazine writer entitled "How wrong-headed can one Apple analyst be?" Chowdry completely misses the mark on Apple, proclaiming their demise, "The best is over for Apple. iPad mini is playing catch up to Google Android, probably will have a mediocre customer adoption." Saying PLUG is aiming for the automobile market is like saying Purina is aiming to sell dog chow to humans. Maybe they will someday but not now. 2) Chowdry aside, you go on to state,"Although Plug Power's recent success has come largely from corporate customers buying systems for local power generation rather than solely from automakers, the auto market would be a much more lucrative market for Plug Power to target." Plug Power's recent success was a significant increase in orders from Walmart for their materials handling technology (forklifts) and (hydrogen supply and service) infrastructure and not for local power generation. PLUG could see the automobile market would not be appropriate for them currently which is why they wisely have chosen to target materials handling first. It's a big market and very realistic for them to contemplate. They've been in the trenches for years, fine tuning the tech and the infrastructure and, apparently, Walmart among many others are seeing this as a proven, money saving, green win-win situation for them. 3) You shouldn't be referencing a completely misleading report to begin with and then follow up with your own misperceptions. You're trying to sidestep your journalistic responsibility here which maybe you could have done if you had left it with just Chowdhry's comments, but you didn't. If many shareholders had misperceptions about the way PLUG would serve the auto industry (materials handling, not actual automobiles) isn't it part of your job to set them straight rather than add to the misinformation?

    Maybe you were just tired or overworked and unable to properly do research, but if that's the case, why write about it at all? In general, I like Motley Fool. I'm a subscriber to Stock Advisor although I don't use it too much. But this is surprising to me. I will be reading any other Motley Fool commentary with a lot more suspicion from now on.

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