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Why Fuel Cell Stocks Slumped Today

By Rich Smith - Dec 29, 2020 at 11:55AM

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The coronavirus relief bill includes minimal stimulus money for fuel cell companies.

What happened

Hydrogen fuel cell stocks are in the news again Tuesday -- and not in a good way.

As of 10:20 a.m. EST, shares of Bloom Energy ( BE 2.22% ) are down 2.6%, Plug Power ( PLUG -0.79% ) is down 6.2%, and FuelCell Energy ( FCEL 2.26% ) is falling hardest of all -- down 9.4%. In fact, at a share price of just $10.46, FuelCell stock has lost 22% of its value since the day before Christmas Eve's abbreviated trading session. Why?

3 red arrows going down and crashing through the floor

Image source: Getty Images.

So what

To eliminate the obvious answer: No, this isn't a case of Wall Street analysts attacking fuel cell stocks. To the contrary, the most recent analyst action we've seen was when Morgan Stanley came out with improved price targets on both Bloom Energy and Plug Power just ahead of the Christmas holiday.

Rather, what we're seeing today appears to be continued disappointment among renewable energy investors in the contents of Congress' just-passed coronavirus stimulus bill. Tucked into this relief bill alongside provisions sending $600 stimulus checks to taxpayers were $35 billion in subsidies for renewable energy in America.

The problem is there's minimal money in the stimulus bill for fuel cell companies. Bloom and FuelCell might perhaps benefit from $500 million earmarked for researching ways to reduce industrial emissions -- or they might not. Plug could potentially get a piece of $2.6 billion set aside for researching "sustainable transportation" -- or it might miss out, too.  

Now what

In any case, there are no direct subsidies to help the nascent fuel cell industry get off the ground -- and that has fuel cell investors less enthused over the relief bill's passage than investors in other industries (such as nuclear power).

If fuel cell companies were already profitable on their own without subsidies, that might not be such a big problem. However, despite big promises of future profits, companies in this industry have remained deeply unprofitable for years, and in some cases, for decades. Investors were perhaps counting on Congress to help them fix that with stimulus cash.

And it didn't happen.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Plug Power Inc. Stock Quote
Plug Power Inc.
PLUG
$36.42 (-0.79%) $0.29
FuelCell Energy, Inc. Stock Quote
FuelCell Energy, Inc.
FCEL
$8.15 (2.26%) $0.18
Bloom Energy Corporation Stock Quote
Bloom Energy Corporation
BE
$26.21 (2.22%) $0.57

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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