Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why CBAK Energy Stock Just Dropped 6%

By Rich Smith - Jan 11, 2021 at 1:13PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

CBAK's news today is good, so why is the stock down?

What happened

Shares of Chinese battery maker CBAK Energy Technology ( CBAT -9.41% ) stock are down 6.5% as of 12:50 p.m. EST Monday, and they're falling on no obvious bad news. More than that -- they are falling despite what appears to be pretty good news.

So what

This morning, CBAK announced that it is partnering with No. 4 Chinese domestic automaker JAC Motors in a three-year strategic agreement to jointly develop "cylindrical lithium-ion batteries and battery packs, including the 46800 model," for use in JAC electric cars.

As CBAK noted, in addition to its role as a leading Chinese automaker on the domestic market, JAC has exported over 640,000 vehicles to the international market," which seems to imply the ability for CBAK to expand its reach internationally as well.

Cartoon characters confused by stock chart arrow falling and crashing into floor

Image source: Getty Images.

Now what

And yet, CBAK stock is down on the news. Why?

Well, investors may have reservations about such details as the fact that the press release didn't include any statement on supply volumes or the value of the contract to CBAK. The company also wasn't very clear on when production of the new batteries would commence, or when they might begin finding their way into actual automobiles being bought by actual consumers. While that is certainly implied in the press release, what CBAK actually said was only that the companies will be "broadly ... working together ... to advance the technology of automotive power batteries and actively explore the implementation of a partnership model that is both effective and capable of advancing their businesses going forward" -- which sounds kind of fuzzy.

Absent any other clear reasons for today's declining stock price, I can only conclude it's the lack of specifics that has investors concerned that this deal may not be as big as first meets the eye.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

CBAK Energy Technology, Inc. Stock Quote
CBAK Energy Technology, Inc.
CBAT
$1.83 (-9.41%) $0.19

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
656%
 
S&P 500 Returns
144%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/01/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.