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Share of socket power (PLUG) – Get the report fell on Wednesday after institutional investor Kerrisdale Capital announced a short position in the hydrogen fuel cell maker, which has reached a valuation of nearly $ 40 billion in recent months.
In a letter announcing the short position, the New York investment manager cites the valuation of Plug while saying the company generated “paltry” revenue of $ 300 million in 2020.
The stock is trading at 40 times Plug’s revenue forecast for 2024, which Kerrisdale calls “aggressive.”
“But this is only a pipe dream, because ‘green’ hydrogen is too expensive and too inefficient to be produced, stored, transported and burned,” says the letter from the company.
“It’s not because of manufacturing inefficiencies or some imaginary S-curve technology that hasn’t been scaled yet. It’s because of the laws of physics, which we don’t believe that Plug can successfully overcome. ”
Plug’s short-term interest is 16%, according to S3 Partners, with stocks rising more than 1,400% in the past 12 months.
Currently, Plug’s only positive business segment is its hydrogen-powered forklifts, which is “almost comical” given its valuation, according to Kerrisdale.
Despite its position that the forklift industry is not big enough to warrant Plug’s valuation, the company says there is a total addressable market of $ 30 billion and 1.5 million annual purchases. of forklifts.
But hydrogen fuel cells are doomed to lose to lithium-ion batteries, which, according to Kerrisdale, “have already demonstrated their value proposition for forklifts and are poised to quickly dominate the market.”
Kerrisdale is also casting cold water on the partnerships Plug has forged over the past two weeks, calling them a sign of weakness rather than strength.
“These ‘major’ agreements have to be seen in the context of all the ‘major’ agreements in the past that have never come to fruition,” Kerrisdale said.
Plug’s shares in the last check fell 7.7% to $ 61.35.
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