While it's unclear, so far, whether the S&P 500 will succeed in staving off a losing week, there's little doubt that hydrogen stocks will end up significantly lower than before trading began on Monday morning. Between shareholders fearing dilution and the prospect of increased competition, several factors have motivated investors to click the sell button this week.
According to data provided by S&P Global Market Intelligence, Plug Power (PLUG 4.35%) stock plummeted 30% from the end of trading last Friday through the market's close on Thursday, while shares of Bloom Energy (BE +1.21%) and Nikola (NKLA +0.00%) are down 11.5% and 11.4%, respectively, during the same period.
NASDAQ: PLUG
Key Data Points
Plug Power's need to raise capital is weighing heavily on hydrogen investors' minds
Powering significant bearish sentiment regarding its stock, Plug Power reported in a regulatory filing that it has entered into an agreement to raise up to $1 billion through the issuance of new equity. After news of Plug Power's intent to raise cash, the market decisively expressed its concern.
But the company's move is wholly unsurprising, considering its consistent inability to grow cash organically. Management also hinted that dire action was necessary when it raised concern about the company's ability to continue as a going concern in its third-quarter 2023 financial report.
While Bloom Energy had no news to report this week, investors decided to trim their positions after learning of Plug Power's equity financing. Like Plug Power, Bloom Energy designs and manufactures fuel cells and is unprofitable. So, investors surmised that Bloom Energy may be in a similar position to Plug Power in the near future.
Regarding Nikola, the more concerning news for investors came from the Consumer Electronics Show (CES) last week. Investor confidence in Nikola is already thin, and news from CES that Nikola is facing increased competition weighed heavily on investors' minds.
Daimler Truck garnered attention with its fuel cell truck expected to appear in Germany in the coming months. Additionally, Paccar is revving its hydrogen ambition, evident at the CES, with its Kenworth T680 fuel cell truck. Using a fuel cell system developed by Toyota, the Kenworth T680 fuel cell truck will be commercially available in 2025.
Does the drop in these hydrogen stocks mean it is time to go shopping?
For those who see the plunging stock prices of Plug Power and Nikola as potential buying opportunities, it's time to pump the brakes. Besides the potential dilution of shareholder value tied to Plug Power's capital raise, investors should be cautious about the numerous red flags surrounding Plug Power and Nikola.
It'll be some time -- if ever -- before these popular hydrogen stocks should appear on investors' buy lists. Bloom Energy, on the other hand, is on firmer financial footing than Plug Power and is worth closer scrutiny from those looking to gain exposure to this niche of the renewable energy industry.
