CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure. CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure.

Plug Power, FuelCell Energy shares run out of juice

Share prices of alternative energy plays Plug Power and FuelCell Energy took a tumble, after electric rallies over the past year.

  • Plug Power Inc (NASDAQ: PLUG) share price sinks to US$60.14 per share
  • FuelCell Energy Inc (NASDAQ: FCEL) tumbles 10% to US$15.84 a share
  • Shareholders sold down the hydrogen fuel-cell names as JPMorgan turned less upbeat
  • Looking to trade PLUG or FCEL shares? Open an IG account today.

Green euphoria mellowing

Share prices of clean-energy players Plug Power and FuelCell Energy both moved sharply lower late last week, following separate bearish research reports from JPMorgan.

At Friday’s (15 January) close, Plug Power slid 9.6% to US$60.14 a share, following a 4.3% drop on Thursday.

FuelCell shares finished Thursday (14 January) 8.1% lower, before slumping another 10% on Friday to US$15.84.

The investor mania over clean energy names in the past year had helped Plug Power and FuelCell record aggressive spikes in their share prices up till the middle of last week.

The skyrocketing stocks confounded some investors, as both firms were not yet profitable and analysts did not foresee them making money until at least 2022, Reuters reported.

Is PLUG powering down?

As of last Wednesday (13 January), PLUG shares more than doubled to US$69.50, from US$33.91 at end-2020. The counter climbed a dazzling 1,001% over the course of 2020.

The hydrogen fuel-cell manufacturer’s shares soared 21% last Tuesday (12 January) after it inked a joint venture (JV) with French carmaker Renault for hydrogen-powered light commercial vehicles in Europe.

A Germany-based trader thus pointed to Plug Power’s seemingly unreasonable valuation and said that the way the Renault JV news was being traded ‘is obviously completely wrong’, Reuters reported.

However, the stock rally halted when JPMorgan rated it ‘neutral’ with a US$60 price target.

JPMorgan cautioned that the shares were fully valued although still ‘a must own in the hydrogen space’.

If the company executes its growth strategy, revenue could surpass US$2 billion in 2025, which may justify ‘the very high multiples at which the stock trades’, JPMorgan added. The note triggered Thursday and Friday’s sell-off.

A week before the Renault announcement, South Korea’s SK Group also said it would take a 9.9% stake worth US$1.5 billion in Plug Power and form a JV targeting Asian markets.

Why is FuelCell also losing steam?

Meanwhile, FuelCell was downgraded to ‘underweight’ by JPMorgan last Thursday, from ‘neutral’.

The research team gave a US$10 price target, suggesting that the shares should be worth about half of its last closing price of US$19.14 at the time.

JPMorgan’s report came after FCEL shares clocked a nearly 800% gain in the past year. Since the start of 2021 until last Wednesday, the stock rose by a further 71%.

FuelCell shares were thus trading at a price-to-forward-sales ratio of about 50 times, making them ‘richly valued’ compared to the company’s peers, JPMorgan analyst Paul Coster wrote on Thursday.

Stock valuation aside, the analyst liked that the company’s technology could be versatile in industrial applications, and expected FuelCell to clinch a ‘breakout contract’ in the industrial, chemical or energy sector.

How to trade Plug Power, FuelCell Energy with IG

Are you feeling bullish or bearish on these alternative energy stocks?

Either way you can buy (long) or sell (short) the asset using derivatives like CFDs offered on IG's industry-leading trading platform in a few easy steps:

  1. Create a live or demo IG Trading Account, or log in to your existing account
  2. Enter <Plug Power> or <FuelCell Energy> in the search bar and select the instrument
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

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