Today's surge in shares for Plug Power, Bloom Energy, and other fuel cell companies
Hydrogen Fuel Cell Stocks Rebound Amidst Challenges
After a challenging period for hydrogen fuel cell stocks, there was a noticeable rebound in February. This respite came as a relief to investors who have seen shares in companies like Plug Power, FuelCell Energy, Bloom Energy, and Ballard Power Systems plummet in recent weeks.
The rebound can be attributed to investor interest in potential entry points following significant prior declines. The sector has faced challenges such as slow development of hydrogen infrastructure and high costs, which had pressured the stocks down. However, the rebound might have been driven more by oversold conditions and speculative positioning ahead of earnings, rather than a definitive turnaround.
One of the key factors influencing this rebound is the upcoming earnings season. February is an important month for fuel cell stocks, marking the start of their earnings reports. Investors are primarily betting on revenue growth potential for these companies, which adds to the volatility in the prices of these stocks.
During this period, Plug Power announced a revenue target of $900 million to $925 million for 2022 and $3 billion for 2025. While this news initially boosted the stock, it soon dropped due to expectations of even bigger numbers. On the other hand, Ballard Power Systems secured an order for fuel cell modules from railroad giant Canadian Pacific for hydrogen locomotives, which could signal a growing demand for the technology.
In the transportation sector, there is significant potential for hydrogen fuel cell technology. India's largest publicly listed company, Reliance Industries, aims to make India a hydrogen hub, and CEO Mukesh Ambani has expressed ambitions to invest $75 billion in renewables, including hydrogen. Similarly, Daimler Truck announced a joint venture with BlackRock Renewable Power and NextEra Energy's renewable arm NextEra Energy Resources to develop charging infrastructure for medium- and heavy-duty electric battery and hydrogen fuel cell vehicles across the U.S.
However, the hydrogen fuel cell market remains niche and faces significant hurdles such as infrastructure and capital intensity. The market's reaction to earnings from unprofitable fuel cell stocks is hard to predict. Investment bank Truist recently cut price targets for several hydrogen fuel cell stocks, leading to a sell-off in shares.
As of 11:50 a.m. ET on Monday, Plug Power stock increased by 14.4%, FuelCell Energy stock is up 14.4%, Ballard Power Systems stock is up 12.2%, and Bloom Energy stock is up 9.6%. Despite the rebound, caution is advised when interpreting this as a reliable bottom, given the ongoing sector challenges.
A new study by the International Council on Clean Transportation projects that one-third of all flights could run on green hydrogen by 2050. This promising outlook underscores the potential for growth in the hydrogen fuel cell industry, despite the current challenges.
[1] Source: Reuters, Bloomberg, and company earnings reports.
- As the market reacts to upcoming earnings season, investors are showing interest in environmental-science companies like Plug Power and Ballard Power Systems, seeing potential for growth in the hydrogen fuel cell sector.
- Technology advancements in the field of hydrogen fuel cells and increasing investments in renewable energy, such as Mukesh Ambani's plan to make India a hydrogen hub, suggest a promising future for finance opportunities in this niche market.
- Despite the current challenges faced by hydrogen fuel cell stocks, the science behind green hydrogen, as showcased by studies like the one by the International Council on Clean Transportation, offers hope for substantial money-making prospects in this sector over the long term.
