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Why FuelCell Energy Plummeted 40.1% in 2021's Final Month

By Keith Noonan – Jan 4, 2022 at 4:16AM

Key Points

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The hydrogen fuel cell specialist was hit with a flood of negative catalysts last month.

What happened

FuelCell Energy (FCEL -2.45%) stock sank 40.1% December, according to data from S&P Global Market Intelligence. The company's share price slumped due to the spread of the omicron coronavirus variant, unfavorable macroeconomic developments, and disappointing quarterly results. 

FCEL Chart

FCEL data by YCharts

The spread of the omicron variant prompted investors to become more cautious about highly growth-dependent stocks early last month, and some companies in the hydrogen fuel cell and electric vehicle (EV) spaces were hit particularly hard. News that the Federal Reserve would be cutting back on stimulus initiatives and potentially raising rates three times also worried investors, and FuelCell Energy spooked the market when its fourth-quarter results arrived with big sales and earnings misses. 

An arrow moving down above chart lines.

Image source: Getty Images.

So what

FuelCell Energy published its fourth-quarter results on Dec. 29, 2021, posting sales and earnings for the period that fell short of the market's expectations. The hydrogen energy company reported a loss of $0.07 per share on revenue of $13.94 million, while the average analyst estimate had targeted a loss of $0.03 per share on sales of $21.55 million.

Revenue in the period was actually down 18% year over year, which is a red flag for a company with a highly growth-dependent valuation. With the omicron variant creating added uncertainty and the Federal Reserve signaling a significantly less favorable macroeconomic backdrop, the weak fourth-quarter results looked even more concerning, and the stock sank to a 52-week pricing low following the earnings release. 

Now what

FuelCell Energy stock has seen a significant rebound early in January's trading. The company's share price is up roughly 11% in the month so far as of this writing. 

The unexpectedly weak sales in Q4 meant that the company ended its 2021 fiscal year with revenue of $69.6 million, down from the $70.9 million in sales it posted the previous year. The company's loss from operations also expanded to $64.9 million, up from $39.2 million in the prior-year period. Despite the relatively soft performance, FuelCell Energy is pushing ahead with spending to power growth initiatives. 

The company expects capital expenditures for 2022 to be between $40 million and $50 million, a significant increase from the $6.4 million in capital expenditures spending it reported in 2021. Research and development spending is also set for a big increase, with management guiding for expenses to rise from $11.3 million last year to between $45 million and $55 million in 2022. 

FuelCell Energy has a market capitalization of roughly $2.1 billion and is valued at approximately 14 times this year's expected sales. 

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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