Today, the broad EV sector is seeing a ton of red. Unfortunately for hydrogen fuel cell players, today’s turmoil hasn’t spared this growth sector. Fuel cell stocks Bloom Energy (NYSE:BE), FuelCell Energy (NASDAQ:FCEL), and Plug Power (NASDAQ:PLUG) are all down between 5% and 12% today. Gevo (NASDAQ:GEVO) is also down 10% today, seemingly on bearish sentiment in this sector, as the company hopes to cater to the FCEV market.
Now, that’s a significant single-day drop.
Accordingly, investors may be wondering what’s going on. After all, these growth names have outperformed the broader market for some time now.
Reports suggest that the “green rush” that we’ve seen of late may be losing momentum due to valuation concerns. After all, these stocks are priced to perfection today. Any sort of inkling of a near-, medium- or longer-term decline in growth isn’t good for such stocks.
A global chip shortage continues to plague the entire auto sector today. Indeed, it appears FCEV makers are being grouped in with the broader sector right now.
Here are a couple other factors investors appear to be pricing in today.
Fuel Cell Stocks Repriced on Key Headwinds
In the case of Plug Power, the largest of its peer group, the company has some company-specific concerns that are taking PLUG stock lower today.
Specifically, Morgan Stanley analysts took a rather indifferent view to PLUG stock, resuming coverage of the FCEV player. The report highlighted a target price of $35, which is still substantially higher than where PLUG stock is trading today. However, the “hold” recommendation has spooked investors, since Morgan Stanley analysts were previously bullish on this stock with a “buy” rating.
The analyst pointed out that while Plug Power does appear to have a strong balance sheet, good strategic partnerships, and advantages with its product set, its valuation today is such that only limited upside potential exists. Investors appear to be taking this as confirmation the sector is overvalued right now.
Additionally, a short report released today on battery maker QuantumScape (NYSE:QS) has rocked the EV sector.
The short report alleges QuantumScape is nothing more than a pump-and-dump scheme. Indeed, investors appear to be taking this call seriously, repricing suppliers in the EV space considerably today. EV makers are also down big on this news.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article.