What happened
Shares of companies investing in the hydrogen fuel-cell sector have been on an extended downtrend. The stocks of Nikola (NKLA +0.00%), Plug Power (PLUG +1.61%), and Bloom Energy (BE +3.27%) are down between 39% and 57% in the past three months. Today, however, investor sentiment is turning and giving shares of those companies a bump. As of 3:45 p.m. EDT Wednesday, shares of Nikola, Plug, and Bloom Energy were up 6.3%, 5.8%, and 5.1%, respectively.
So what
Each of these names has had negative press over the past year. Nikola was called out by a short-seller for exaggerating the ability of its semitruck technology and other items that forced founder and chairman Trevor Milton to resign last year. Plug Power recently said it was going to have to restate three years' worth of financials related to the accounting of warrants it issued to customers as incentives, and Bloom Energy was the subject of a Wall Street Journal article in December 2020 that highlighted accusations made by the same short-seller that exposed the issues with Nikola.
Image source: Getty Images.
Nothing today changes any of those concerns. All three businesses continued to advance the alternative energy technologies they tout, and all have made progress in recent months. Today seems to just be investors feeling like the rotation away from high-tech and high-growth names into cyclical sectors and value stocks may have gone far enough.
Now what
None of these companies are yet profitable, and Nikola doesn't even have a commercial product yet. But Nikola has brought its first battery electric prototype trucks to its Arizona facility from the German plant where they were built, and the company has mapped out its plans for hydrogen fuel cell electric vehicles (FCEVs) that will follow.
Plug has said the accounting issue won't change its business progress, and wasn't a cash item so it won't affect its balance sheet. The company has also announced several partnerships and planned joint ventures this year to expand its fuel cell technologies in Europe. It has also announced plans for two new green hydrogen plants in the U.S. as it works to create a network that can support hydrogen fueled alternatives in transportation.
Bloom will announce its first-quarter 2021 results on May 5, and may give investors an update on its hydrogen initiatives after the company joined the "Hydrogen Forward" coalition to advance hydrogen development domestically. Bloom previously also said it could hit $1 billion in revenue in 2021 at the high end of its guidance. That would represent 26% growth over 2020 revenue.
Investors should monitor any progress toward that goal, as well as the business accomplishments of the others in the industry. The shorter-term stock volatility is likely going to continue unless, or until, these businesses become more established.
