It is becoming increasingly clear that stock market speculators are going to be treating "clean" (green) tech as the next internet. Parallel to what was seen in the late 90s, a very true thesis (the internet will change the world) will be taken to extremes. Back then, when a company announced a website launch, stocks would rush up 10-15% on the open. It sounds silly but we are seeing the same things now - lately some solar stocks are announcing US plants, and that alone pushed them up 10% on a session. This for an industry that has been suffering from wicked over production, no less.
But humans are humans - the behavior never changes; just change the thesis/theme/bubble/hype. Heck we even had clean tech stocks back in 99, Ballard Power (BLDP) anyone? Fuel Cell (FCEL)? Plug Power (PLUG)? I was assured (without a doubt!) by "those in the know" a decade ago that "first mover advantage" would have these 3 as the future kings of alternative / battery energy. My gosh, I was even offered white papers to prove the "can't miss" nature. Now I see 3 penny stocks - feel free to peruse the Yahoo message boards of those names, and go back a decade and you'll see the same confidence you see now in today's crop of "can't miss".
Hence, this action can be played until the music stops - just be careful of buying into the hoopla behind the greater theme. Yes, just as the thesis of the internet as a huge sea change was correct, "green" tech will be a game changer but sorry, just as in 1999, there won't be 100s of winners in this space... just as there were very few [eventual] winners from the Internet revolution. (Lycos? Excite? AtHome Networks? Exodus? I have about 100 more....) [insert cursory "but it's different this time!"] There will be survivors and eventual winners [Yahoo, Amazon, Ebay] - but pretending to know who they are, this far in advance, is pretentious. Just as then, I expect many of the companies being talked up by the speculator set, to be out of business or trading for $1.12 when we look back in 2019. [I say this with a twinkle in my eye as the "merger of the century" between AOL and Time Warner - just spit AOL back on the public market as an IPO... so funny]
So with all that said, let us speculate....
A123 Systems (AONE) [don't dare look at the valuation] was one of the year's most hyped IPO's. [Sep 24, 2009: A123 Systems - Hope or Hype?] Thus far it has been a disaster for anyone who did not sell in the first week, but after crumbling through late November, it's turned back around of late. Today's news of a joint venture with (drumroll) a Chinese company is all anyone needs to hear - time to rocket that stock, and lo and behold it just jumped over the 50 day moving average.
- A123 Systems Inc. and General Motors Co. partner SAIC Motor Corp. said Thursday they plan a joint venture in China to supply batteries for electric and hybrid vehicles. State-owned SAIC will hold a 51 percent stake in the joint venture, which will focus on developing battery systems for electric and hybrid cars, trucks and buses, A123 said in a statement. (as always, there must be a joint venture to have access to China; in return - they will eventually get your technology. In 10+ years - they won't need you)
- It gave no financial details. (no need for financial details, just run the stock up)
- The venture would make complete vehicle traction battery systems for hybrid electric and pure electric passenger vehicles and heavy-duty truck and bus applications.
So who will be the big winner down the road in China? The US? A123? China BAK Battery (BAK)? BYD (BYDDF) - backed by Warren Buffett? Any number of smaller, or private companies I have never heard of? Some company being developed in a garage in Sweden? Who knows. Let's just not fall for the "market opportunity is so huge, countless massive winners will emerge". I've heard that in just about every emerging technology - I have yet to see any industry where countless companies thrive over the long run.
But again - don't worry about the details (wouldn't it be funny if A123 agreed to take only 2% of future profits of the JV?) just buy, buy, buy. The tulips are back in their next iteration.
Author's Disclosure: No position