Plug Power (NASDAQ:PLUG) faced a significant setback as its stock plummeted by as much as 38% on Friday. The hydrogen fuel cell developer’s decline followed weaker-than-expected results and a sobering “going concern” notice in its regulatory filing, indicating a potential inability to fund operations over the next year.
The Latham, N.Y.-based company disclosed in the filing, published late Thursday, that it anticipates its “existing cash and available for sale and equity securities will not be sufficient to fund operations through the next 12 months.” This assessment led to a stark statement in the filing, stating, “These conditions and events raise substantial doubt about the Company’s ability to continue as a going concern.”
Plug Power, known for manufacturing fuel cells and hydrogen-producing devices, reported a loss of $0.47 per share for the third quarter, surpassing the Wall Street expectation of a $0.30-per-share loss. The net revenue for the quarter fell short of $198.7 million, compared to the analysts’ expectation of $200.2 million, resulting in a net loss of $283.5 million.
CEO Andy Marsh acknowledged the challenges during the earnings call, citing difficulties associated with hydrogen availability, particularly due to plant disruptions, including their Tennessee facility, and temporary outages across the hydrogen network.
Despite the grim outlook, Plug Power’s CFO, Paul Middleton, downplayed the “going concern” warning during the earnings call, attributing it to accounting standards. Middleton emphasized the company’s strong financial position, boasting a $5 billion unleveraged balance sheet with minimal debt. He expressed confidence in the various parties and solutions the company is working with to address its financial challenges.
Renewable energy stocks, including Plug Power, have faced headwinds this year amid a high-interest-rate environment. The Global Clean Energy ETF (ICLN), which includes Plug Power, is down over 30% year-to-date.
Plug Power’s stock, once a favorite among retail traders during the “meme stock” trend in 2020-2021, has been under pressure, with short interest at 26% of the float. Year-to-date, Plug Power shares have plummeted over 70%. Analysts at JPMorgan, Oppenheimer, and RBC Capital downgraded the stock and lowered their price targets following the disappointing results, citing challenging operating and capital market environments. JPMorgan’s Bill Peterson, in a note to clients, downgraded the stock to Neutral and lowered the price target to $6 from $10 per share, anticipating a period of range-bound performance until clarity on the balance sheet emerges.
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