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Why CBAK Energy Technology Stock Fell 19.6% in February

What happened

Shares of CBAK Energy Technology (NASDAQ:CBAT) slumped 19.6% in February, according to data from S&P Global Market Intelligence. The battery technology specialist’s stock saw steep declines at the end of the month as investor confidence in growth-dependent tech stocks wavered. 

CBAT Chart

CBAT data by YCharts.

The Chinese battery technology company’s stock has surged over the past year amid signs that it might have big growth opportunities in the electric vehicle (EV) market, but it remains vulnerable to volatility. With EV stocks suffering substantial sell-offs at the end of last month, it’s not surprising that CBAK shares saw a steep pullback.

Draining battery icons.

Image source: Getty Images.

So what

CBAK unveiled new battery technology on Feb. 19. The company’s Special 26650 battery is a variation on its existing 26650 lithium rechargeable battery line and has been designed to function in ultra-low-temperature environments. 

CBAK shares briefly popped following the announcement, but the subsequent slump for the broader tech sector dragged them into negative territory. Growth stocks have powered the market’s gains over the last year, and EV stocks have been particularly hot. However, investors appear to be adopting a more cautious valuation approach, and that means CBAK could see continued volatility.

Now what

CBAK’s stock has continued to slide early in March. The company’s share price is down roughly 22% in the month so far. 

CBAT Chart

CBAT data by YCharts.

CBAK has a market capitalization of roughly $408 million and is valued at approximately 10 times this year’s expected sales. Despite the recent pullback, its shares have still soared roughly 862% over the past year. If the company can establish a foothold as a provider of lithium-ion batteries for electric vehicles, it could enjoy strong growth going forward, but investors have to keep the stock’s impressive run and speculative outlook in mind.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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