PLUG Stock: Red-Hot Plug Power Plummets on Accounting Errors

Shares of Plug Power (NASDAQ:PLUG) continue to drop in Wednesday’s pre-market activity after the hydrogen power supply maker said it would restate previously issued financial statements. PLUG stock was down as much as 20% by 7:00 am Eastern after losing 8.14% on Tuesday.

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The company said the restatements are not expected to affect its cash position, business operations or economics of commercial arrangements. The restatements for fiscal years 2018 and 2019 and its quarterly filings for 2019 and 2020 will be disclosed in the firm’s 10-K for the year ended Dec. 31, 2020, due to errors in accounting primarily related to several non-cash items. However, that form will not be filed by the March 16, 2021 deadline.

PLUG made the announcement “in consultation with KPMG LLP,” according to a company press release. The accounting firm “has not informed the Audit Committee of any issues related to an override of controls or misconduct,” the announcement noted.

PLUG Stock Has Been Huge Gainer

Over the last 12 months, PLUG stock has seen gains of more than 1,400% as investors piled into what’s viewed as a disruptive innovator with huge long-term potential.

InvestorPlace analyst Luke Lango has been banging the drum on the name. He called recent dips in the shares “a golden opportunity to buy a key player in the disruptive clean energy industry.”

While that may still be the case, what specifically should investors expect to see restated? Plug Power identified the following:

  • The reported book value of right of use assets and related finance obligations;
  • Loss accruals for certain service contracts;
  • The impairment of certain long-lived assets; and,
  • The classification of certain costs, resulting in a decrease in research and development expense and a corresponding increase in cost of revenue.

While stating the obvious — “The accounting related to the restatement is complex and technical” — management continues to expect to achieve its previously stated gross billings targets of $475 million in 2021, $750 million in 2022 and $1.7 billion in 2024.

Clearly, this is a “stay tuned” moment for PLUG stock investors. Those areas identified for restatement, in addition to management’s description as “complex and technical,” could have significant fundamental impact for the company.

Meanwhile, recognize that any news item — or lack thereof — could add to volatility in PLUG shares.

On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, following fintech, agtech and property tech startups.

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