Please ensure Javascript is enabled for purposes of website accessibility

Why CBAK Energy Stock Just Popped

By Rich Smith - Jan 25, 2021 at 2:25PM

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

And why it may not have deserved to.

What happened

Shares of Chinese electric car battery maker CBAK Energy Technology (CBAT 0.00%) rushed ahead more than 19% in early trading Monday, before pausing and retracing in the afternoon. As of 1:35 p.m. EST, CBAT shares remain up a respectable 3.2%.

So what

What drove the stock higher, and what sapped its support as the day wore on?

In a press release this morning, CBAK announced that it has signed "a one-year strategic cooperation framework agreement" with Chinese light electric truck manufacturer Chengdu Raja New Energy Automotive Technology. Raja, says CBAK, has produced over 5,000 electric trucks in its two years in operation, and set up 3,500 electric charging stations to power them.  

The agreement outlines CBAK's plan to team up with Raja on two projects. The first is creating "a battery swapping project for the food delivery and logistics industries," wherein CBAK will supply "high-quality lithium-ion batteries" to Raja. The second is building an uninterruptible power supply for traffic lights.

Blackboard drawing of stock chart arrow going up being erased and pointing back down

Image source: Getty Images.

Now what

How big of a deal is this for CBAK? That's hard to say. In the press release, CBAK suggests it might supply as many as 1 million battery cells to Raja in the first year of the project. It does not, however, specify when that first year will be, nor the value of the contract to CBAK. Nor does the press release specify how many battery cells will be required to power one of Raja's electric trucks.

It takes approximately 7,100 cells to power a single Tesla electric car, for example. If you apply that math to the Raja deal, CBAK might only be selling enough batteries to power 140 electric trucks. That wouldn't be a very big deal at all, and it wouldn't be a very good reason for CBAK stock to be going up today.

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
$1.05 (0.00%) $0.00
Tesla, Inc. Stock Quote
Tesla, Inc.
TSLA
$674.90 (1.66%) $11.00

*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
330%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/24/2022.

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

Premium Investing Services

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