Considering the many possible uses of fuel cells, the market for them won’t go up in a straight line. Nor will the large-scale production of cheap renewable hydrogen be a goal that can be accomplished overnight. Still, new hydrogen fueling stations will be added at a steady pace, and it will only be a matter of time until mass-produced fuel cell cars are available for sale. Stock market analysts take all these developments into account before recommending what to buy and what to sell. Some breaking news stories could send the market into turmoil and every company featured below has ample experience with stock volatility. Despite this, outlook and potential remain unchanged: Fuel cells are the future.
Plug Power (Nasdaq: PLUG) has again received an infusion of capital, by offering convertible preferred stock in the amount of USD 35 million. It was priced at USD 2.31 per share and will have to be redeemed in 13 monthly installments at 105 percent the face value, or USD 2.69, should shareholders decide not to convert or the stock drop below the conversion price. I can’t see any upside to this. I’ve also heard that the company sold parcels of more than 20 million shares to investors that I am not familiar with.
In the third quarter, gross revenue increased to USD 55.3 million, at a net loss of USD 15.2 million, or USD 0.07 per share, around two cents better than expected. Plug managed to open several fueling stations and convert 1,483 forklift trucks. It anticipated 12-month gross revenues to be between USD 175 million and 190 million, which would bring it one step closer to profitability. Because of larger factory halls, manufacturing capacity was now at 20,000 units annually.
Plug sees great promise in China, where it is looking for business partners, and customers such as FedEx, which are working to convert their courier vans to run on fuel cells. The technology has already undergone a series of tests at the courier service, similar to what Ballard and Hydrogenics have done in partnership with UPS. While I am closely following Plug’s progress, I see the better opportunities at Ballard, as it focuses on integrating stacks during vehicle production instead of offering to convert trucks at a later date. But when the time is ripe for fuel cell shares to grab the spotlight, every market player, including Plug, will stand to profit from it.
Share trading can result in a total loss of your investment. Consider spreading the risk as a sensible precaution. The fuel cell companies mentioned in this article are small and mid-cap ones, i.e., they may experience high stock volatility. This article is not to be taken as a recommendation of what shares to buy or sell – it comes without any explicit or implicit guarantee or warranty. All information is based on publicly available sources and the content of this article reflects the author’s opinion only. This article focuses on mid-term and long-term prospects and not short-term profit. The author may own shares in any of the companies mentioned in it.
Written by Sven Jösting