Gentex Shares Plunged: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of automobile safety-component manufacturer Gentex (NAS: GNTX) had a head-on collision with the market today, and shares fell as much as 15% in intraday trading.

So what: Back in 2008, President George W. Bush signed a new auto-safety law that would likely require all cars and light trucks to have a back-up camera. Originally, the final details of the implementation were supposed to be in place by the end of last year. That was then pushed to today, and today it was pushed again until the end of this year.

Gentex is a key developer of rearview camera systems, and while the law itself is a potential boon for the company, the fact that the process of finalizing the law is being prolonged is not.

Now what: According to Bloomberg, the estimated cost to implement the rule could reach $2.7 billion and would add $58 to $203 to the cost of a car. That could be part of the hold-up in pushing through the final details of the law, though Transportation Secretary Ray LaHood simply emphasized the need to "make sure we have a good rule."

For Gentex shareholders, the wait for the rulemaking process to conclude may be drawn out, but assuming it concludes with a requirement that would cause a spike in the demand for rearview cameras, it may be well worth the wait.

Want to keep up to date on Gentex?Add it to your watchlist.

At the time this article was published Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye. 

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