The highs and lows of hydrogen and fuel cell stocks in recent weeks can be best described as a bumpy ride following a significant and rapid increase in prices. It seems to me that the market has entered a major consolidation phase. Yet this is no reason to lose faith, especially as the wild fluctuations that have been raging since early December 2020 – with some stocks climbing more than 50 percent inside a month – begged a correction. A process which is now in full swing. At the end of the day, it’s the future of the industry that counts and so here I stand by the old stock market maxim: The trend is your friend.
There has been a stark rise in the valuation of the business from around USD 100 million to now over USD 9 billion, with the stock price increasing from USD 1 – USD 2 to USD 29. I would go so far as to call it totally excessive. I got early wind of FuelCell Energy [Nasdaq: FCEL] as a turnaround after a management consultancy had “cleaned it up” and after the company had undergone a period of refinancing and restructuring and happily onboarded Orion Energy Partners as a key investor.
There are two sides to every story. And that’s very much the case with the planned cooperation with General Motors, GM, and the cancellation of 2,500 battery electric refuse trucks for Republic Services which turned out to be rather fortuitous in retrospect. In the GM scenario, Nikola would itself have had to spend over USD 700 million on tools, among other things. The participation of GM with USD 2 billion as a “valuable consideration” would have resulted in a dilution of the number of issued stocks.
Plug Power [Nasdaq: PLUG] has undergone one financing round after another, with a third bought deal sandwiched in between, this time to the tune of more than USD 1.7 billion. What’s more, the South Korean SK Group has promised to put up USD 1.6 billion in return for a 9.9 percent ownership stake in the company, an investment that will also form a basis for a joint venture between the two corporations. And if that’s not enough, Plug, which is headquartered in the U.S., intends to fit out delivery vehicles for France’s Renault Group. Plus, the company has been busy buying in top talent for its management team. That’s the good news.
The company Weichai Power, which I’ve so far only mentioned in this column as partnering Ballard, has a revenue around the EUR 20 billion mark and a stock market valuation of the same order. In 2020, a good EUR 1 billion was marked up as profit, with dividends also paid out. Weichai Power has several bus brands to its name and is the nation’s largest diesel engine manufacturer; it has clearly recognized the potential offered by fuel cells in the commercial vehicle sector and, in its own words, is intent on becoming the market leader.
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