Stock Market Volatility

If you’ve been following the irrational run up of fuel cell stocks (PLUG, FCEL, BLDP, ARTX), then you’ve also been waiting for this day. In a very predictable move, an analyst at Citron Research (known primarily for their short selling research) today said Plug Power (PLUG) is worth 50 cents per share and that there are no fundamental changes to the company now or expected in their business model.

Irrationality of the market at its best.

Exactly one year ago PLUG was trading at $0.18 and today traded over $11.50 shortly after the market opened. That’s a gain of over 6,000% in one year! The YTD rise of nearly 400% (at its peak today) was mostly the result of the recent announcement for an order from Walmart for 1,700 of PLUG’s GenDrive units to help power forklifts in some of their distribution centers. While that is certainly great news for the company, it definitely doesn’t justify the hyperbolic move experienced in the company’s share price. Finally, rationality is returning to the stock — evidenced by the 40% drop today from its closing price on 3/10/14 of $10.31. Still, use this (and its peers) as a prime example of the differences between trading and investing, and the dangers of the irrationality of the stock market.