Whichever enterprise figure is in the focus of the stock market, it will become the basis for share price development: With around US$ 31.5 million in the third quarter, Plug did deliver the expected turnover revenue, but had to continue posting a loss that the stock market took as a negative sign (expressed in US cents per share). This meant that the stock price, which had meanwhile went from trading at around US$ 1.70 to an impressive US$ 3.00, suffered a severe drop to about US$ 2.00 after news of the financial figures broke. In contrast, Tesla’s evaluation was primarily based on the number of vehicles sold during the quarter and not on losses or reduced liquidity during the same period – a bit of a different view on everyone.
Plug is in a good position! The company got drowned in quotes (resulting in over US$ 234 million worth of orders, with new ones amounting to more than US$ 160 million). Placements are made by both existing customers as well as new ones from other regions of the globe besides Europe. During the fourth quarter, FuelCell Energy gained another six customers and installed 15 new H2 filling stations. Sufficient liquidity of above US$ 115 million enable the organization to cope with the high growth on its own. What is especially important is that the gross profit margin is scheduled for a notable increase one step at a time and that the target for 2016 is to retain a profit, meaning to break even and beyond.
The other news is that the company wants to sustain a 25% gross profit margin. Big customers like Walmart support FuelCell’s goals. In 2016, Walmart alone has ten additional logistics centers that could be the next in line for having their fleet of forklift trucks retrofitted. Plus: Large forwarders like FedEx are being mentioned on internet forums with increasing frequency as potential major customers, as Plug had already retrofitted ground support equipment at FedEx airfields. The company based in Latham, New York, was also able to contract MMM to supply fuel cell stack components. MMM has had experiences with the technology for many years.
To sum it up: Growth first needs money to heave the company into a good position (capacities, infrastructure, personnel, etc.). This seems to have been implemented well in 2015, and it has paved the way to make this year the first in the company’s history that will close with a profit. The stock market could very well bid on it!
Risk warning
Investors must understand that buying and selling shares is done at their own risk. Consider spreading the risk as a sensible precaution. The fuel cell companies mentioned in this article are small and mid-cap ones, i.e., they do not represent stakes in big companies and the volatility is significantly higher. This article is not to be taken as a recommendation of what shares to buy or sell – it comes without any explicit or implicit guarantee or warranty. All information is based on publicly available sources and the assessments put forth in this article represent exclusively the author’s own opinion. This article focuses on mid-term and long-term perspectives and not short-term profit. The author may own shares in any of the companies mentioned in this article.
Author: Sven Jösting