This has been a pretty solid year for Plug Power (NASDAQ:PLUG) stock, especially in August.
The company started off the month by announcing a big deal to bring its hydrogen fuel cell technology to a major UK supermarket. It followed that days later with second-quarter earnings that beat analyst loss and revenue estimates.
Until last Thursday, PLUG stock was up 322% in 2020. On Friday, PLUG closed at $12.93, for a 5.4% loss on the day. At the same time, another hydrogen fuel cell company, Ballard Power Systems Inc (NASDAQ:BLDP), saw its shares pop.
What happened? The blame for the drop in PLUG stock can likely be laid squarely at the feet of Citron Research. The short seller took to Twitter (NYSE:TWTR) on Friday to bash Plug Power.
Ballard Power Systems Starts Off a Big Day for EV Stocks
On Friday, an analyst with Roth Capital published a note saying a “material catalyst” was near for Ballard Power (NASDAQ:BLDP). The Chinese government was reportedly on the verge of reinstating subsidies for hydrogen fuel cell trucks and buses.
Given that Ballard already has a joint venture deal with Chinese partner Weichai to build fuel cell electric vehicles for the market, the report sparked a pop for BLDP. Shares closed up nearly 8% on the day.
The stocks of fuel cell companies often move together on big news. The assumption is that in such small industry, what is good news for one company is also good news for others. However, in this case, PLUG stock felt the opposite effect.
Shares were up early in the day, but quickly began to slide. PLUG ended up down 5.4% on the day. The trends carried over this week, with BLDP starting Monday on the rise again, while shares in plug Power continued to slide.
Citron Research Chimes In
The negative day for Plug Power seems to have been the result of a tweet by short seller Citron Research. Calling Plug the “anti-Tesla (NASDAQ:TSLA),” Citron Research posted that PLUG stock should soon be trading at $7, noting that the company has never made a profit, and that its CEO has sold 95% of his stock at an average price of less than $7 a share.
Not everyone agrees with the Citron Research position, but the well-timed tweet was enough to do some damage.
Bottom Line on PLUG Stock
The details in that Citron Research tweet clearly resonated with investors who had questions about Plug Power. In fact, Plug Power CEO Andy Marsh was reported to have sold another $3 million worth of shares (although at considerably more than $7 a pop) the day before all the fuss broke out.
It’s also true that Plug Power has never been profitable. As InvestorPlace contributor Mark. R. Hake pointed out in July, there are no near-term profits in sight for the company.
However, hydrogen fuel cell technology is a long-term play and still something of a gamble. Because of much easier refueling — no having to plug into a charger for hours — advocates of the technology think it will eventually supplant battery-powered electric vehicles.
Some automakers, including Toyota (NYSE:TM), have hydrogen fuel cell cars in production. But for now, its primary application is commercial. Plug Power is focused on selling hydrogen fuel cell solutions for warehouses and short-range delivery fleets.
On Aug. 3, Plug announced a deal to supply hydrogen fuel cell solutions for the U.K.’s Asda supermarket chain. That was a first step into the U.K. market for the company and helped to kick off August’s run for PLUG stock.
Also helping there was the company’s Q2 earnings report on Aug. 6. The company delivered yet another loss, but the 3 cents per share beat the market’s expected 10 cents per share loss. Revenue of $68.07 million for the quarter was up 18.3% year-over-year, and also handily beat Wall Street estimates of $59.47 million.
PLUG stock hit record highs in August. The company may not be profitable, but as a hydrogen fuel cell leader, it has potential for long term growth. And it’s been gaining momentum. Rather than the start of a correction, the current PLUG slump may well be a buying opportunity for those who want to get in on the hydrogen fuel cell market.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.