Roller-coaster ride for Basin Water

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A poor set of results in March sent Basin Water’s stock into freefall. The share price recovered almost as dramatically after a new deal with Cal Water.

Basin Water is a regular in the “worst performing stock” lists. News that the company had posted a net loss of $15.3 million on revenues of $18.8 million in 2007 sent the stock into free fall, and it dropped by more than 26% against a virtually flat NASDAQ before recovering ground on news that it had signed a 10-year contract with California Water Service Company. Under the agreement, Basin Water will provide technology and services to the highly farmed Salinas District for the removal of nitrates from well sites.

The recovery was short-lived, however, as a damning exposé by Citron Research spooked investors all over again.

Basin Water has always been a volatile stock to play, but the situation has worsened in the last four months. In November 2007, the shares slumped on poor third quarter results, and dropped further when it emerged that the company was the subject of a series of lawsuits, alleging that it had issued “materially false and misleading statements” regarding its business and financial results. Three months later, the market did not seem particularly reassured when founder Peter Jensen was replaced as CEO by former COO Mike Stark.

The latest swings have proved that investing in the company is not for the faint-hearted.