Plug Power PLUG shares plunged lower Friday, shedding more than $1.5 billion in value, after the hydrogen-fuel-cell developer warned that it may not be able to continue operations amid supply chain disruptions and a severe cash burn rate.
Plug Power, which provides fuel cells for electrified industrial vehicles used by Amazon AMZN and Walmart WMT, also posted weaker-than-expected third quarter sales of $199 million last night, thanks in part to what it described as "unprecedented hydrogen supply challenges" in the north American hydrogen market.
In a later filing with the Securities and Exchange Commission, however, Plug Power also added that given its current cash position and expected capital spending, there is "substantial doubt about the Company’s ability to continue as a going concern."
The group is seeking a $1.5 billion loan from the Department of Energy, as part of its green hydrogen network financing, but funds are unlikely to being flowing into the Latham, New York-based group until early next year.
"To alleviate the conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern, management is currently evaluating several different options to enhance the Company’s liquidity position, including the sale of securities, incurrence of debt or other financing alternative," Plug Power said.
"The Company’s plan includes various financing solutions from third parties with a particular focus on corporate level debt solutions, investment tax credit related project financings and loan guarantee programs, and/or large scale hydrogen generation infrastructure project financing," Plug Power added in the 10-Q filing.
Plug Power shares were marked 43.1% lower in early afternoon trading Friday to change hands at $3.38 each, a move that would extend the stock's 2023 decline to around 72% and value the group at just over $2 billion.
KeyBanc Capital Markets analyst Sangita Jain, who carries a 'sector weight' rating on Plug Power stock, said the lack of a detailed financial plan amid the 'going concern' warning is troubling.
"Management reiterated the myriad options being considered including project finance, ABLs, advances against restricted cash and inventory draw down," she said. "But nothing has been decided despite elevated cash burn and the unrestricted cash & available for sale securities balance declining from $2 billion at the end of last year to around $500 million at the end of the third quarter."
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