FuelCell had to feel what it means to fall for smart investors (loan sharks?). The preference shares that could be converted into ordinary shares were probably used to push down the price via short selling and to receive more and more shares due to a conversion ratio. Did the analysts who evaluate and recommend FuelCell Energy simply overlook this? Now the capital has been merged. The number of artificially inflated shares via conversion of preference shares has now been significantly reduced. Unfortunately, all this seems to leave the management cold, otherwise they would at least make a press release.
The price, which was calculated at US$ 2.20 before the reversal split, then fell further to almost US$ 1.00. Is this provoking a delisting in order to buy up the company cheaply? I am counting on the fact that it will soon be possible to return to normality and that corporate partners such as Generate Capital will constructively support the refinancing of debts (arising from the purchase of various FC projects) and possibly act as purchasers of shares for stabilisation and participation – without any commitment. Because one thing is for sure: FuelCell Energy has good active know-how and has built many FC systems.
The fact that Exxon (Carbon Capture) takes such an unusually long time to win projects/contracts is logical, because both sides have massively stirred up the media. What is not yet will hopefully come. The further price slump after the reversal split was unfortunately to be expected, but a stabilisation at a higher level should now come. And the Nasdaq listing will be maintained because the share price will again be quoted above US$ 1.00. Unfortunately, it is all a crime thriller in which you don’t know why certain players have such a great interest in harming the company.
It is also clear that the current valuation, given the company’s know-how, order backlog and own FC power plants, could quickly tempt a large plant manufacturer to swallow the company. The fact that another FC power plant “Bridgeport” has recently been taken over for US$ 35.4 million, I interpret as a positive signal.
Every investor must always be aware of his own risk assessment when investing in shares and also consider a sensible risk diversification. The FC companies and shares mentioned here are small and mid caps, i.e. they are not standard stocks and their volatility is also much higher. This report is not a buy recommendation – without obligation. All information is based on publicly available sources and, as far as assessment is concerned, represents exclusively the personal opinion of the author, who focuses on a medium- and long-term valuation and not on a short-term profit. The author may be in possession of the shares presented here.
Author: written by Sven Jösting, May 24, 2019