What happened
By now you've heard the news: On Tuesday, the U.S. Senate passed (its version of) the long-awaited $1.2 trillion infrastructure bill, containing at least $9 billion in funding for various fuel cell technologies and billions more for "clean energy" in general.
Fuel cell stocks reacted positively to the news yesterday, but so far this morning, sentiment appears to be running in the opposite direction. In Wednesday trading, 11:20 a.m. EDT, shares of fuel cell leaders Bloom Energy (BE 3.15%) and Plug Power (PLUG 11.84%) were down about 6.4% each.
At the same time, on the other side of the Atlantic, a new SPAC IPO by the name of Freyr Battery (FREY 1.12%) is having an even tougher time of things -- down 19.5%.
Image source: Getty Images.
So what
Why are the fuel cell stocks plummeting this morning? In the absence of any specific bad news (and there doesn't seem to be any), I suspect this is an example of investors practicing the investing maxim "Buy the rumor, sell the news."
Up until the infrastructure bill passed, investors were able to bid up fuel cell stocks in anticipation of good news. Now that the good news has arrived, however, what's left to hope for?
Profits? Perhaps. Neither of these companies has reported a GAAP profit anytime in the last 20 years, of course, but I suppose the addition of billions of dollars in government support could change that. On the other hand, though, even that government support isn't assured, because while the Senate may have passed the infrastructure bill, the House of Representatives has yet to vote on it -- and might vote no.
Now what
Another rumor/news dynamic may be pressing Freyr Battery even lower. Just this morning, you see, The Wall Street Journal featured Freyr Battery in an article on "the cheap, green, geopolitical future of batteries" and hailed the Norwegian stock as a builder of battery gigafactories that will run on cheap, abundant, local hydroelectric power.
Citing projections from Freyr itself, the WSJ mused that the company looks cheap at a valuation of just 0.8 times projected 2025 earnings before interest, taxes, depreciation, and amortization (EBITDA) and said the company was "below the radar" -- but predicted "that might not last."
Indeed, it didn't last long at all. While you might have expected such a bullish piece in the Journal to send Freyr stock flying today, instead, the shares cratered.
So is this another case of "Buy the rumor, sell the news?" Perhaps. But it might also be a case of investors checking in on Freyr to confirm what the Journal just told them, and not liking what they see. SEC filings by the company, you see, show that Freyr is currently unprofitable, having lost $0.06 per share last year, and getting even more so over time -- having lost another $0.06 per share in Q1 2021 alone.
Whatever might happen in 2025, Freyr's not at all a profitable business today, and today's share sell-off reflects that fact.