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

The market held onto modest gains despite a turbulent trading day, but these three stocks suffered the Monday blues. Find out why.

Dan Caplinger
Dan Caplinger
Apr 28, 2014 at 8:35PM

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.