Plug Power Inc.’s accounting errors sent shares of the fuel-cell maker plunging on Wednesday, dragging down its peers.
The Latham, New York-based company, which soared more than 1,400% in the past year through Tuesday, tumbled 13%. Its industry counterparts Ballard Power Systems Inc. and FuelCell Energy Inc. also slumped, with the latter posting a first-quarter revenue miss this week.
Plug Power said it found accounting errors in results for 2018, 2019 and the first three quarters of 2020. The disclosure is a setback for the company, which has struck a series of partnerships with companies such as Renault SA and South Korea’s SK Group. It also came at a time when growth stocks have been hit by the climb in bond yields. The WilderHill Clean Energy Index is down about 1.5% this year, following a surge of more than 200% in 2020.
“Anytime a company needs to restate results, investors shoot first and ask questions later,” said Jeffrey Osborne, a New York-based analyst at Cowen, who maintained a buy-equivalent rating, with a price target of $75 for the shares.
B. Riley’s Christopher Souther also sees a buying opportunity for Plug Power, while Truist Securities downgraded Plug to a hold recommendation.
“Following these disclosures, we expect limited opportunity for outperformance in the near-term,” Truist Securities’ analysts said in a note to clients. “While the company reiterated long-term targets and the accounting issues appear transitory in nature, we see limited upside until resolution.”
Plug Power has successfully raised capital in the last year, though its forward revenue targets could face headwinds as competition looms, according to Peter McNally, global head for industrials, materials and energy at Third Bridge Group in New York.
“The future for Plug depends on broadening their customer base and their product line, and the company needs to invest to get there,” he said. “The good news is that the company has never been this well capitalized in its history.”
It isn’t the first time a major fuel-cell stock has been rocked by accounting errors. Last March, Bloom Energy Corp. tumbled to $3 per share from more than $14 earlier in the year after restating its revenue downward for 2018 and 2019. The stock quickly recovered and soared to $42.65 last month before pulling back.
See more: Clean Tech Valuations Are Wildly Out of Sync With Company Profit
Despite the selloff on Wednesday, Plug Power is still up about 9% in 2021 -- compared with an advance of 5% for the S&P 500.
Investors piled into alternative energy stocks leading into President Joe Biden’s victory, and are now facing concern over high-flying valuations. Hydrogen, which can be generated and used without producing greenhouse gases, has been touted as an alternative form of energy, while some participants remain unconvinced. Carlyle International Energy Partners recently called hydrogen power a “bubble.”
— With assistance by David R Baker