Why Ballard Power Systems Stock Crashed 10% Today

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What happened

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Shares of fuel-cell pioneer Ballard Power Systems (NASDAQ: BLDP) short-circuited in Nasdaq trading Tuesday, closing the day down 10% even though the day's only real news was good.

This morning, Ballard announced that it has received an order for $1.6 million worth of "Squad Power Manager (SPM-622) Special Operations Kits" from U.S. Special Operations Command. This is not a large award, but for this small company it represents more than 1% of its $112 million in annual sales.

So what

In its press release describing the contract, Ballard noted that the SOCOM contract is "the first" -- implying there will be more -- "issued by the Program Executive Office (PEO) -- Soldier, as part of the newly approved program of record, with Milestone C approval having been received in 2017."

Assuming the potential for more contracts is real, though, why did Ballard Power stock fall in response to the news? Maybe it didn't. Maybe instead, Ballard stock fell as a result of profit-taking after yesterday's 21% jump in share price, which itself came in response to an issuance of optimistic new guidance, predicting better-than-expected sales and positive earnings (before interest, taxes, depreciation, and amortization) for fiscal Q4 2017.

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Now what

That seems like a more logical explanation for Ballard's hard fall today. In fact, when combined with continuing worries over litigation risk -- two more law firms published notices regarding shareholder class action lawsuits against Ballard in the past 24 hours -- it seems much more likely that investors gifted a quick 21% profit on Monday might simply have decided to cash in and claim their profit, before any more bad news got a chance to surface.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.