Fuel cell stocks struggled on Wednesday. In early trading, shares of Bloom Energy (BE 2.30%) were down 2.8%, Plug Power (PLUG 3.68%) was off 6.5%, and Ballard Power Systems (BLDP 1.75%) was worst of all, down 9.4% at 10:45 a.m. EST.
Last month, fuel cell companies were cashing in on their astounding stock market success by issuing new shares at rich valuations and collecting the cash. Now, they're doing it again -- and diluting shareholders in the process.
Yesterday morning, Plug announced that it has completed an upsized stock offering, raising $2 billion from the sale of 32.2 million new shares at a price of $65. Not coincidentally, Plug stock is now trading down at around $65, and $9 below what it cost just two weeks ago.
Taking a cue from its rival, Ballard Power announced last night that it, too, is going back to market for some quick cash. It initially said it was trying to raise $350 million from the sale of at least 9.5 million shares of stock (and as many as 10.9 million shares, if underwriters exercised their overallotment option). But this morning, Ballard announced that it, too, is upsizing its offering, by more than 50%!
Instead of 10.9 million shares, Ballard will now sell as many as 17.1 million shares (14.9 million in the initial offering, plus 2.2 million more as an overallotment option). Its offering price is the same, however, and at $37 apiece, 17.1 million shares can now be expected to raise in excess of $630 million in new cash for Ballard.
It will, however, dilute existing shareholders out of about 5.7% of their ownership interest in the company. No wonder those shareholders are upset today.
The odd man out in all of this frenetic share-selling and cash-raising is Bloom Energy. As I noted last month, Bloom was alone in the industry in sitting out this tidal wave of share issuances. And yet, with more than $1 billion in debt, and only $325 million in cash to offset it, Bloom Energy now arguably possesses the weakest balance sheet of any of the four major fuel cell players.
With a share price still trading near its all-time high, Bloom Energy should do a secondary share issuance of its own. Yes, it will dilute its shareholders. But if that's what it takes to keep up with the Joneses and give it the cash to compete in the new hydrogen economy, I really don't think Bloom Energy has any other choice.
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