⚡Plug Power: Trouble In Paradise?
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⚡Plug Power: Trouble In Paradise ?
A class-action lawsuit has been filed against Plug Power (PLUG) for accounting errors, leading to a decline in stock value. (Tweet This)
Background
Founded in 1997 in NY, the hydrogen and fuel cell company provides zero-emission solutions for a sustainable future. Plug went public in 1999 and presently has a market valuation of $21.6B. The company raised $2.2B in funding and even acquired Amazon (AMZN) and Walmart (WMT) as clients. But what the company still lacks are profits.
With action against climate change gaining a renewed push under the Biden administration, clean energy solutions are more sought after. The plug has been gaining popularity and investor love in the past few years with the rise of EVs and clean energy. The company surged over 1000% just in 2020, despite operating at a loss and having a debt of over $600M.
Plug had a great start in 2021, surging 100% in January, peaking at $75.49. Plug also formed a joint venture with Renault SA to build hydrogen-fueled delivery vans in Europe. The company was also set to build the largest green hydrogen plant in the USA. A bullish first couple of months for Plug, until a sudden turn of events shook any complacency that was building up!
What Happened?
A lawsuit filed against the company alleges that Plug Power and its senior executives misled investors and failed to provide them with significant information. Plug was supposed to inform investors that: (a) it couldn’t file the 2020 annual report on time due to internal review delays and (b) report material weaknesses in its internal control over financial reporting.
The accounting errors have spotlighted the company’s transparency, leading to a decline in stock as some investors lost trust. Nasdaq has issued a notice to reissue financial statements of fiscal years 2018, 2019 and quarterly filings for 2019 and 2020.
This situation on the company’s financials notwithstanding, JP Morgan has backed the stock, and analysts believe the aforementioned accounting errors are just a speed bump for Plug. The company is expected to be profitable by 2024/25. A lot depends on whether any other skeletons tumble out of the closet as the lawsuit moves forward. Plug, for its part, is projecting confidence it will emerge unscathed from this episode with minimal fallout. The reality probably is somewhere in the middle. If so, it might still be a net positive for Plug.
Market reaction:PLUG ended the day at $36.79, down 5.45%; in pre-market trading, the stock is up 1.39%.
Company Snapshot 📈
PLUG $36.79 -2.12 (-5.45%)
Analyst Ratings (15 Analysts) BUY 73% HOLD 20% SELL 07%
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