What happened

It's a mixed up, crazy mess in the fuel cell industry today. As of 1 p.m. EST, shares of category leader Plug Power (PLUG -0.97%) were plunging on news of a big new share issuance, Ballard Power Systems (BLDP -3.25%) and Bloom Energy (BE -4.09%) were following Plug down 5.7% and 5.4%, respectively, but FuelCell Energy (FCEL -2.63%) was defying the downturn with an 8% gain.

What the heck is going on here today, and what does it mean for investors?  

Two stock arrows cross paths, with the green one ascending and the red one descending.

Image source: Getty Images.

So what

Let's see if we can make sense of it all, beginning with the biggest news of the day: Plug's share offering.

Capitalizing on an enormous 1,700% gain in its stock price over the past year, Plug is taking advantage of investors' irrational exuberance to raise a boatload of cash -- probably $1.8 billion at a secondary offering price of $65 a share -- which will give Plug Power by far the biggest cash war chest of any fuel cell company on Wall Street.

Plug investors are acting upset at the stock dilution, and also the price of the offering, which is well below Plug's closing share price of $73.18 last night. But why are they taking out their wrath on Ballard and Bloom as well?

In the case of Ballard, I'd blame a new neutral stock rating from analysts at Piper Sandler, who like the progress Ballard has made in getting its fuel cells into green energy initiatives in the bus, trucking, railroad, and marine markets, but don't like the stock's $35 valuation much at all, and say Ballard stock is only worth about $31.

Now what

Similar concerns could be raised about the valuation of all the fuel cell stocks, of course. As of their closing prices last night:

  • Ballard Power was trading for more than 88 times trailing sales.
  • FuelCell shares cost more than 98 times sales.
  • Plug Power cost more than 110 times sales.
  • Bloom Energy looks like a relative bargain at only nine times trailing sales.

Mind you, according to Goldman Sachs research, historically, any stock that costs more than 20 times sales at the start of a period tends to lose value over the next 12 months. That doesn't necessarily mean that a stock like Bloom Energy, which costs "only" nine times sales, will go up. (Bloom isn't profitable, after all. Nor are any of the others.) It does suggest, however, that investors who are bidding up the share price of FuelCell stock in the middle of a rout of the entire industry are betting against history repeating itself.

That may not be a smart bet to make.