Shares of Plug Power (PLUG) – Get Report dropped Wednesday soon after institutional investor Kerrisdale Funds announced a limited situation in the hydrogen-gas-mobile maker, which has shot to a practically $40 billion valuation in current months.
In a letter saying the shorter posture, the New York investment supervisor cites Plug’s valuation whilst stating that the company produced a “paltry” $300 million of earnings in 2020.
The inventory trades at 40 instances Plug’s earnings projections for 2024, which Kerrisdale phone calls “aggressive.”
“But it’s all just a pipe dream, for the reason that ‘green’ hydrogen is too expensive and too inefficient to make, shop, transport, and burn off,” the firm’s letter mentioned.
“That is not because of producing inefficiencies or an imaginary technology S-curve that has nonetheless to be scaled. It’s since of the rules of physics, which we really do not count on Plug can properly defeat.”
Plug’s shorter interest is 16%, in accordance to S3 Partners, with the shares up far more than 1,400% more than the past 12 months.
Presently, Plug’s lone constructive company section is its hydrogen fueled forklifts, which is “virtually comical” looking at its valuation, according to Kerrisdale.
Even with its stance that the forklift sector isn’t really big more than enough to justify Plug’s valuation, the company does say there is a $30 billion overall addressable industry and 1.5 million once-a-year forklift buys.
But hydrogen gasoline cells are destined to lose out to lithium ion batteries, which Kerrisdale states “have by now demonstrated their price proposition for forklifts and are immediately coming to dominate the current market.”
Kerrisdale also throws cold drinking water on the partnerships Plug has signed in the previous two months, calling them a sign of weak spot somewhat than energy.
“These ‘major’ discounts should really be seen in the context of all the previous ‘major’ specials that in no way panned out,” Kerrisdale reported.
Plug shares at past check dropped 7.7% to $61.35.