What happened
Shares of the hydrogen fuel cell company Plug Power (NASDAQ: PLUG) had an incredible performance last year – more than 15 times in 12 months. This sounds like great news for the stock, but an analyst has a different word for it: “absurd”.
In a series of tweets this morning, short seller Kerrisdale Capital Management exposed his case against Plug’s shares, and it appears that he is already affecting the shares. The share of plugs fell 6.5% as of 11:30 am EST. But what specifically does this analyst have against the company?
Image source: Getty Images.
And
Announcing his short position in Plug shares today, Kerrisdale warns that investors have invested their “hopes, dreams and delusions of the green hydrogen energy movement” in Plug shares, “but the ‘Hydrogen Economy’ is a mirage.” Quoting Elon Musk, a well-known technology critic, Kerrisdale argues that “the world * will never * significantly use ‘green’ hydrogen for energy. It is very expensive and inefficient to make, store, transport and use” – and it is a “fantasy delusional “think differently.
The world * will never * significantly use “green” hydrogen as energy. It is very expensive and inefficient to make, store, transport and use. Just ask @elonmusk: https://t.co/fqUY3gDnqT. Lithium batteries are better in almost all use cases and their superiority grows every year (3/9)
– Kerrisdale Capital (@KerrisdaleCap) January 20, 2021
What now
So, what is the future of Plug’s stock, in Kerrisdale’s estimate?
Emphasizing that Plug obtains 70% of its sales from only two customers, Amazon.com and Walmart, both “are encouraged to buy Plug equipment in exchange for cheap $ PLUG guarantees”, the analyst suggests that the company may have trouble finding other customers willing to buy its products without the warrants. At that point, the weakness of the business would become evident.
Ultimately, Kerrisdale thinks Plug’s shares “are not worth $ 1 billion, let alone $ 40 billion”, and he may even be right about that. After all, not long ago – February 2019 – that the entire Plug Power could be purchased for less than $ 1 billion in market capitalization.