It's been an exciting day for investors in the alternative energy industry Friday, and it's been more exciting for some than for others.
In volatile trading, shares of Chinese rechargeable battery maker CBAK Energy Technology (CBAT 0.48%) have rocketed as high as an 11% gain, and plunged as low as an 8.5% loss. They're up modestly over Thursday's close as of 1:30 p.m. EST -- but the way things are going, who knows where they'll end up at day's end?
In contrast, electric car-charging network Blink Charging (BLNK -3.39%) is hanging onto most of today's gains and is still up a strong 9.8%, and natural gas vehicle-fueler Clean Energy Fuels (CLNE -2.88%) is currently winning the day with a 10.7% gain.
So how do we make sense of all of this as investors? I'll tell you, it's not always easy.
If truth be told, I'm not seeing any news of note that would explain the sudden rise in popularity of Blink stock or Clean Energy stock. No analyst upgrades, no price target hikes, and certainly no actual, substantive news on the wires.
I suppose that, as companies that provide alternative energy solutions to fueling vehicles, either with electricity in Blink's case or with natural gas in the case of Clean Energy, both stocks could be responding to the sustained gains in the price of oil we've seen this month. Since Dec. 1, the cost of a barrel of WTI crude has jumped nearly 10%, including a better than 1% gain today. As providers of alternatives to oil, it makes sense that stocks like Blink and Clean Energy would respond positively to oil getting more expensive (because that makes the alternatives to oil look relatively cheaper).
It doesn't really explain roughly 10% price gains in a single day, today, however, and honestly, I suspect this is mere volatility we're witnessing -- stocks doing their proverbial "random walk," with little rhyme or reason to explain it.
Now as for what's going on with CBAK Energy, though, I think I can be of more help there. This morning, Hong Kong-based stock research firm J Capital Research released a short report accusing CBAK Energy of having "all the hallmarks of a Chinese fraud," and it shook the stock to its core.
Calling CBAK Energy Technology the "barely reanimated corpse of CBAK, a Chinese reverse merger that lost all its manufacturing assets to default in 2014," J Capital blasts the company for being led by an inexperienced CFO "who took over following the sudden resignation in August last year of the former CFO," and a CEO who is "little more than a straw man" for the CEO of the formerly bankrupt CBAK.
Citing internal sources within the company, J Capital adds that CBAK is out of cash, "about to go bust," and diverting resources supposedly earmarked for building a new factory to service a $120 million supply contract for Chinese car company Kandi Technologies (KNDI -0.56%) to instead just keep itself from going broke. In fact, reports the analyst, "satellite photos ... prove" CBAK hasn't actually built much of all since 2016."
Ultimately, J Capital concludes that this effort will fail. "CBAT has zero value," warns J Capital. And while it's true that, as a short-seller, J Capital would profit if that prediction proves correct, when you consider that CBAK hasn't earned a penny in profit over the last five years, investors who ignore J Capital's warning do so at their own peril.