A123 Systems – Thus Far Hype

As I was doing research of old posts (closing in on 7000!) in the solar space, I came upon an entry for A123 Systems (AONE) one of the biggest hyped “clean tech” IPOs of 2009. There was a lot of debate over this name when it came IPO [Sep 24, 2009: A123 Systems – Hype or Hope?] and as I wrote in Sep 09:

I don’t know enough about it to tell if it is hype or hope. I do remember similar companies a decade ago flying off the handle on hype – Ballard Power (BLDP) and FuelCell Energy (FCEL) are the first two to come to mind. [I encourage you to pull up a 10 year chart of Ballard Power or FuelCell to see where they used to trade in 1999] A decade later neither of these are making money – but I am sure the “hope” remains. ;) Since we seem to be returning to a lot of the same situations as we saw in the NASDAQ a decade ago in terms of ever upward markets, rampant speculation, and laughter at valuation analysis; I suppose it is appropriate we start seeing similar type of stocks get the hype.

Here is a quick overview per CBSMarketwatch followed by a (surprise!) bullish viewpoint via CNBC. The stock is set to come IPO in the coming hours; demand is high as this is oversubscribed – and why not, it has all the sexy code words. Being profitable is not a condition to buy stock hand over fist these days; and frankly who knows how to value a company like this.

Thus far it looks like a bunch of hype… and a perfect representation of the American investment ponzi system working to perfection. Company insiders make out like bandits, investment bankers guiding the deal make out like bandits…. and suckers who bought the deal (except for those who were given IPO shares and flipped out to the retail sucker on day 1) are fleeced again. Somewhere Joe 6Pack is on a Yahoo message board claiming this is the big one, just have to keep holding! Have faith!!!

Dude you got fleeced by the used car salesmen in $3000 suits. Again. “You get nothing. You lose. Good day sir!” But your service (and money) along with countless others helped to buy at least 8 second homes in the Hamptons this summer by a bunch of 27 to 31 year old Goldman, Lehman, and Morgan boys who unloaded this inventory to the lemmings.

Reverse Robin Hood (steal from the many to give to the few) prevalent on Wall Street, in all its glory. Errr.. I mean “we’re all in this together. Wall Street = Main Street. Without the bailouts there would be no country left.”

But don’t worry – there is always a new darling IPO right around the corner which will have all the sexy code words, CNBC reporting in an objective way pumping it, and nary a dime of profits for shareholders, but plenty of management showering in monetary excess.

Disclosure: No position

About Mark Hanna 543 Articles

Affiliation: Hanna Capital, LLC

Mark Hanna is President and Owner of Hanna Capital, LLC, a registered investment advisory firm. Mark has been a follower of markets since the late 80s, with a focus on individual equities since the mid 90s. He has been a well known commentator in the financial blogosphere for the past 5 years, following a career in corpoporate finance and accounting. Mark attended the University of Michigan where he graduated with a degree in Economics.

As an avid reader, Market Montage is the personal blogging site for Mark to share his views on economics, markets, and the like. Occasional cynicism and wit shall be deployed in his postings.

Follow Mark on Twitter @fundmyfund.

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