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Why Westport Fuel Systems Stock Just Crashed 22%

By Rich Smith – Sep 22, 2020 at 11:44AM

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Easy come, easy go.

What happened

Four days ago, news that Westport Fuel Systems (WPRT 3.30%) had won Chinese certification of a new "HPDI 2.0" natural gas engine technology sent the stock soaring nearly 39% in a single day.

Four days later, Westport is giving a lot of those gains back after its Chinese subsidiary issued a "clarification statement" that last week's news may not be quite as good as it sounded.

Westport stock is down 21% as of 11:30 a.m. EDT.

Chinese flag superimposed on a stock market chart

Image source: Getty Images.

So what

According to the statement from Weichai Westport, "although the [WP12HPDI] engine has obtained Certification from the Ministry of Ecology and Environment of the PRC, it may not be sold to the market according to the relevant Laws and Regulations of the People's Republic of China (PRC)." 

According to the company, before it can be sold on the market, the engine "must successfully complete calibration work for high altitude, high temperature, cold environment and vehicle durability testing of over 700,000km."

Now what

Westport did not disclose how many of those kilometers of testing its new engine has already been driven. All we know for sure now is that Westport investors now have significantly "more miles to go before they sleep" than they thought they did last week.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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