A123 Systems Shares Popped: What You Need to Know

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:A123 Systems (NAS: AONE) popped 49% in intraday trading today after General Motors (NYS: GM) said it has awarded A123 Systems a contract to build battery packs for "future" electric vehicles (EVs).

So what: Neither company commented on the value of the deal for "future" EVs or the brands or models involved. GM's currently offers the recently introduced Chevy Volt EV.

Now what: GM's statement did say, "GM is committed to offering a full line of electrified vehicles -- each of which calls for different battery specifications." An A123 spokesman stated the company expects to build "thousands or up to tens of thousands of battery packs" a year for GM. It was already known that A123 had a production contract with a major North American automaker, though today's announcement suggests that contract just got bigger and was extended. It's not clear if that's enough to change analysts' views that the company will lose money through their forecast period.

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At the time thisarticle was published Fool contributor Cindy Johnson does not own shares of any company named above. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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