What happened
Hydrogen fuel-cell stocks sank on Friday as macroeconomic news rattled the stock markets and triggered a massive sell-off in growth stocks in particular. By 3 p.m. ET on Friday, here's how much some of the most popular names from the niche renewable energy space had declined:
- Plug Power (PLUG +1.14%): Down 9.9%.
- FuelCell Energy (FCEL +7.21%): Down 12.3%.
- Bloom Energy (BE 0.87%): Down 6.6%.
So what
Pressure started to build on hydrogen and fuel cell stocks earlier this week after the emergence of a new and potentially more infectious COVID-19 variant, omicron, shook nations across the globe. Just when economies were reopening and the United States was about to step on the gas with a $1.2 trillion infrastructure package, a new variant has renewed fears of lockdowns and yet another economic slowdown.
Investors in clean energy cheered the infrastructure package, with shares of Plug Power, FuelCell Energy, and Bloom Energy rocketing the day that the bipartisan bill was passed.
Image source: Getty Images.
The problem, though, is that all of these companies are only starting off and have yet to turn a profit. They're primarily focused on growth spending and establishing themselves right now, which is why any event that could stall the economy doesn't bode well for them.
The broader market sell-off has only exacerbated those fears. And it's not just omicron that's making the stock markets edgy. The Federal Reserve might raise interest rates earlier than expected given high inflation. When rates rise, the bond market appeals to investors more than stocks.
A disappointing U.S. jobs report this morning only added fuel to the fire, and it came the same day that high-flying tech stocks plunged on news of stricter regulatory scrutiny, especially for foreign companies listed in the U.S. Meanwhile, the omicron variant has been detected in the U.S.
There's only so much the stock markets can handle in a day, so it's not surprising stocks crashed across most sectors. Shares that almost seemed unstoppable until days ago got hammered the most.
PLUG data by YCharts.
Now what
Looking beyond today's steep fall, hydrogen fuel-cell stocks have gained more attention than ever in recent months. Green hydrogen, for example, was the talking point at COP26, the United Nations climate conference held in November. Meanwhile, Plug Power, Bloom Energy, and FuelCell Energy combined gave investors multiple reasons to remain optimistic, including back-to-back deals, big contracts, strong quarterly numbers, and even a strong outlook.
Bloom Energy, for example, recently signed a contract that could generate $4.5 billion in revenue over the next three years. And Plug Power hasn't just seen a flurry of deals in recent weeks, but also recently raised its revenue outlook for 2022. FuelCell Energy, meanwhile, reported solid quarterly numbers some weeks ago.
The point: Growth stocks and volatility go hand-in-hand, so investors should ensure they don't panic-sell as long as their investing thesis holds.
