Plug current actions (PLUG) – Get the report fell Wednesday after institutional investor Kerrisdale Capital announced a short position in the hydrogen fuel cell maker, which reached a valuation of about $ 40 billion in recent months.
In a letter announcing the short position, the New York investment manager cites Plug’s valuation while saying the company generated “poor” revenue of $ 300 million by 2020.
The shares are trading 40 times Plug’s revenue projections for 2024, which Kerrisdale calls “aggressive”.
“But it’s all just a pipe dream, because‘ green ’hydrogen is too expensive and too inefficient to produce, store, transport and burn,” the firm’s letter said.
“This is not due to manufacturing inefficiencies or an S curve of imaginary technology that has not yet been scaled. It is because of the laws of physics, that we do not expect Plug to be able to defeat successfully.”
Plug’s short interest is 16%, according to S3 Partners, with shares up more than 1,400% in the last twelve months.
Currently, Plug’s positive business segment is that of hydrogen-powered forklifts, which are “almost comical” considering their valuation, according to Kerrisdale.
Despite its stance that the forklift industry is not big enough to justify Plug’s valuation, the firm says there is a total addressable market of $ 30 billion and 1.5 million annual forklift purchases.
But hydrogen fuel cells are destined to be lost to lithium-ion batteries, which according to Kerrisdale “have already proven their value proposition for forklifts and are quickly dominating the market.”
Kerrisdale also throws cold water at the associations Plug has signed in the past two weeks, calling them a sign of weakness rather than strength.
“These“ important ”agreements should be seen in the context of all“ important ”past agreements that were never fulfilled,” Kerrisdale said.
Stocks of connectors at the last check fell 7.7% to $ 61.35.