Ballard Power Falls 23% in One Day; Is This an Opportunity?

Or should you avoid this stock like the plague?

| More on:
The Motley Fool
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

They say investing isn’t for the faint of heart. It requires staying calm, even as stocks swing wildly up and down. But even the most seasoned investors would get weak in the knees if one of their stocks fell 23% in one day.

And that’s exactly what happened to Ballard Power Systems (TSX: BLD)(Nasdaq: BLDP) on Wednesday, as its shares sunk from $5.99 to $4.60 per share. Strangely, Ballard’s shares are still up over the past two days after gaining 31% on Tuesday. It seems that the company’s shareholders just can’t make up their mind.

So what’s going on?

Normally the biggest swings in a company’s stock price occur after an earnings release. But Ballard hasn’t reported earnings since February, and hasn’t even had any news releases since March 14. Yet on Tuesday, nearly 4% of the company’s shares outstanding changed hands. By comparison, 0.1% of RBC’s shares change hands on an average day.

Ballard was not alone. Plug Power (Nasdaq: PLUG), which uses Ballard’s technology in its fuel cells, also has seen its shares swing wildly. After gaining 49% on Tuesday, its shares dropped 24% on Wednesday. And over 100% of its shares changed hands on the day.

Casino stocks

Recently Citron Research came out with a report that described Plug Power as a “casino stock”, suggesting that investing in Plug is really more like gambling than investing. And no wonder – with so many shares trading in a single day, shareholders are clearly hoping to flip the shares for a quick profit rather than hold them for the long term.

The same thing could be said for Ballard. The good news is that both stocks are still up on the year. Ballard’s shares are up 185% and Plug’s share are up a whopping 315%. The bad news is that most shareholders haven’t held the stock for that long.

Foolish bottom line

So what should you do? Well, assuming you are an investor, these stocks are clearly not suitable. While both of them have gained plenty this year, those gains have been fueled by speculation and greed than by fundamentals.

And for those of you who prefer to make risky short-term bets, Las Vegas has perfect weather this time of year.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. 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, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Benjamin Sinclair holds no positions in any of the stocks mentioned in this article.

More on Investing

Hands holding trophy cup on sky background
Investing

3 Growth Stocks That Could Be Huge Winners in the Next Decade and Beyond

Here are three top TSX growth stocks that may be worth a look, given the significant valuation declines these stocks…

Read more »

edit Back view of hugging couple standing with real estate agent in front of house for sale
Dividend Stocks

Why Real Estate Stocks Are a No-Brainer Addition to Your Portfolio

Real estate stocks, especially REITs, offer some distinct advantages over other types of stocks, making them must-have additions to most…

Read more »

Man data analyze
Stocks for Beginners

Beginners: 2 Market-Beating Stocks Just Getting Started

Brookfield Asset Management (TSX:BAM.A)(NYSE:BAM) and Constellation Software (TSX:CSU) are proven market beaters that could continue their ways.

Read more »

oil and natural gas
Energy Stocks

Small OPEC+ Oil-Output Hike: Buy More Energy Stocks?

Energy stocks could soar higher, because oil markets will remain tight due to the small production increase by OPEC+.

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

3 Top TSX Dividend Stocks to Buy for Monthly Passive Income

Top TSX stocks with monthly dividends now trade at cheap prices for investors seeking passive income.

Read more »

edit Person using calculator next to charts and graphs
Investing

Where to Invest $500 in the TSX Right Now

Long-term investors can look to buy stocks, including Suncor Energy and Shopify, as they are poised to outpace the broader…

Read more »

Canadian Dollars
Dividend Stocks

Create Free Passive Income and Turn it Into Thousands With 1 TSX Stock

If you can't afford to invest, you can certainly create passive income another way and use that to invest in…

Read more »

falling red arrow and lifting
Investing

2 Oversold TSX Stocks That Should Bounce Back

Stocks that are oversold without an external catalyst like a market crash or a weak sector might be risky buys,…

Read more »