Why Plug Power Stock just crashed

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What happened

Hydrogen fuel cell company shares Connect the power (NASDAQ: PLUG) have had an incredible run in the past year – over 15 times in 12 short months. This sounds like great news for the stock, but one analyst has another word for it: “absurd.”

In a series of tweets this morning, short seller Kerrisdale Capital Management presented his case against the Plug stock, and it already appears to be having an effect on the stock. Plug shares are down 6.5% at 11:30 a.m. EST. But what exactly does this analyst have against the company?

Cartoon characters confused by stock market chart arrow falling and crashing on the ground

Image source: Getty Images.

So what

Announcing its short position in the Plug stock today, Kerrisdale warns that investors have invested “their hopes, dreams and illusions of the green energy movement of hydrogen” into the Plug stock, “but” the hydrogen economy “is a mirage”. Quoting Elon Musk, a well-known tech critic, Kerrisdale argues that “the world will * never * significantly use ‘green’ hydrogen for energy. It’s too expensive and inefficient to manufacture, store, carry and use ”- and it’s a“ delusional fantasy ”to think differently.

Now what

So what’s the future of the Plug stock, according to Kerrisdale’s estimate?

Stressing that Plug achieves 70% of its sales with only two customers, Amazon.com and Walmart, who “are incentivized to buy Plug hardware in exchange for cheap $ PLUG warrants,” the analyst said the company may struggle to find other customers willing to buy its products without mandates. At this point, the weakness of the business would become apparent.

In the end, Kerrisdale thinks the Plug stock “isn’t worth $ 1 billion, let alone $ 40 billion,” and she might even be right. It was not so long ago, after all – February 2019 – that all Plug Power could be purchased for a market cap of less than $ 1 billion.



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