What happened

Electric vehicle stock Hyzon Motors (HYZN -3.51%) crashed this morning and was trading down 23% at 10:30 a.m. EDT.

Shares of the hydrogen fuel cell commercial vehicle manufacturer have had quite a choppy ride since Hyzon Motors went public on July 19 after a merger with a special purpose acquisition company, but a scathing short-seller attack is proving brutal today.

So what

On Sept. 28, Blue Orca Capital released a short-seller report on Hyzon Motors that contained some stunning allegations.

A news anchor in a studio with breaking news flashing behind on screen.

Image source: Getty Images.

Below are some of the things Blue Orca has claimed in its report:

  1. Fake largest customer: Blue Orca says Shanghai HongYun, the company Hyzon secured a 500-truck order from earlier this month, was formed just three days before the deal and appears to be a fake shell entity.
  2. Large order not really an order: Blue Orca says Hyzon's claim that it will deliver 1,500 trucks to New Zealand-based Hiringa by 2026 are misleading, as Hiringa is just a small marketing start-up and not a customer. Hiringa reportedly told Blue Orca it doesn't intend to take any delivery from Hyzon in 2021, contrary to the latter's claim that Hiringa will account for 24% of its 2021 deliveries.
  3. Inflated revenue projections: In its investor presentation dated Feb. 2021, Hyzon claimed heavyweights like Coca-Cola, Heineken, and IKEA as its customers with potential orders worth $700 million. Blue Orca points out Hyzon dropped these names from its subsequent investor decks and disclosures, yet didn't adjust its revenue projections.
  4. Unrealistic financial projections: Blue Orca says Hyzon's projected gross margin of 32% despite no revenue generation right now is "pure fantasy," as it's nearly twice the industry average and 10 percentage points higher than Tesla's gross margin.
  5. Repackaged version: Blue Orca says Hyzon is just a repackaging of struggling fuel cell Chinese parent Horizon, which delisted from China's OTC market in March 2021 and reported 81% decline in fuel cell sales since 2019.

Now what

These are some serious allegations about a company that's just gone public, but it's always prudent to take short-seller reports with a grain of salt while you do your own due diligence.

For example, I quickly checked Hyzon Motors' February investor presentation and found the company claimed only to be in advanced discussions with Coca-Cola, IKEA, and Heineken for orders. With Hiringa, though, Hyzon's pipeline showed contracted delivery of 20 units in 2021.

Also, Blue Orca cited the resignations of two chief technology officers as a red flag. Hyzon's press release, however, states that Gary Robb, also a co-founder, retired (and didn't step down abruptly) on Sept. 2 and was succeeded by Shinichi Hirano, who spent 17 years with Ford Motors (F -1.06%) before joining Hyzon.

Eventually, a response from Hyzon Motors is the only thing that can pacify investors. While you wait and watch, you might want to check out other electric vehicle stocks worth your money.