Monthly chart of AONE as of 6-2-2012 dating back to its IPO

A123 Systems stock chart spells death notice

In addition to the latest 8-K filing by A123 Systems, Inc, (Nasdaq: AONE) which reads more like a death watch message to investors, the chart has been saying it all along.

Will a cash infusion from strategic investors comes through to save the day for A123 Systems?

Looking at the monthly chart dating back to its IPO, I can understand why one trader I know has been short A123 Systems, Inc, (Nasdaq: AONE) since the $10 level; a series of lower lows and lower highs. Now trading just under a buck, the stock is indeed in serious jeopardy as the company itself is questioning its own ability to remain as an operational concern. In plain English, that means the company could go out of business without a rescue.

This is not unusual in this space of so-called clean energy. For example, the solar sector has been hit very hard the past few years, especially when cheaper products from China weigh in on the market. Now it appears the lithium-ion battery sector is having its time in the barrel; and A123 is at the center of it with recalls on batteries for the new Fisker Karma.

A123 Systems has reported that it has isolated the problem, which it thinks is linked to one machine involved in the manufacture of its prismatic battery cells. Still, A123 Systems will need to replace defective batteries made at its Livonia, Mich., plant, costing the company $55 million.


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I realize they do more than supply cars with batteries, but the fact that you can count on your fingers and toes the number of electric cars being built every day is not helping the business reality. Nor is the Prius C (nickel batteries). Excellent analysis.