Plug Power Actions (PLUG) – Get report fell on Wednesday after institutional investor Kerrisdale Capital announced a short position in the hydrogen fuel cell maker, which has soared to a valuation of nearly $ 40 billion in recent months.
In a letter announcing the short position, the New York investment manager cites Plug’s assessment when he says the company generated “negligible” revenue of $ 300 million in 2020.
The shares are traded at 40 times Plug’s revenue projections for 2024, which Kerrisdale calls “aggressive”.
“But it’s all a chimera, because ‘green’ hydrogen is very expensive and inefficient to produce, store, transport and burn,” says the company’s letter.
“This is not due to manufacturing inefficiencies or an S curve of imaginary technology that has not yet been scaled. It is because of the laws of physics that we do not expect Plug to successfully defeat.”
Plug’s stake sold is 16%, according to S3 Partners, with shares rising more than 1,400% in the last 12 months.
Currently, Plug’s only positive business segment is hydrogen powered forklifts, which is “almost comical” considering its assessment, according to Kerrisdale.
Despite its position that the forklift industry is not large enough to justify Plug’s assessment, the company claims that there is a total addressable market of $ 30 billion and 1.5 million annual forklift purchases.
But hydrogen fuel cells are destined to lose out to lithium-ion batteries, which Kerrisdale says “have already demonstrated their value proposition for forklifts and are rapidly dominating the market.”
Kerrisdale also throws cold water on the partnerships that Plug signed in the past two weeks, calling them a sign of weakness rather than strength.
“These ‘important’ businesses must be seen in the context of all previous ‘important’ businesses that never worked,” said Kerrisdale.
Plug-in shares on the last check fell 7.7% to $ 61.35.