Plug Power dives as the company says it will restate financial reports

Plug Power
A Plug Power forklift system.

  • Plug Power dropped by 15% Wednesday after the company said it will file financial restatements.
  • The restatements will cover fiscal years 2018 and 2019 and quarterly filings for 2019 and 2020.
  • The hydrogen-fuel cell company said there were accounting errors related to non-cash items.
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Plug Power shares sharply dropped Wednesday after the hydrogen fuel-cell company said it will restate some of its financial reports because of accounting errors.

The company said the restatements will cover the fiscal years 2018 and 2019 and quarterly filings for 2019 and 2020. The errors related to several non-cash items including the reported book value of right-of-use assets.

Plug Power shares closed down by 7.9% at $39.33 after earlier sliding by as much as 20%. The stock in 2021 has bulked up by 16% and has advanced from about $3.30 over the past 12 months.

The company said it doesn’t expect the revisions to impact its cash position or business operations but will change how it accounts for certain transactions and items.

“The accounting related to the restatement is complex and technical and involves significant judgments in how to apply U.S. [Generally Accepted Accounting Principles], given the innovative nature of the company’s business,” in a “new and rapidly developing industry,” Plug Power said in a press release.

The company said it had discussed its fourth-quarter 2020 and preliminary year-end results with its audit committee and its auditor KMPG before their release “and at that time, no material issues were raised.” But after the release, it said that it and KPMG identified the need for restatements.

Plug Power said it will file its Form 10-K for 2020 as soon as possible as it was unable to make the March 16 deadline.

It also expects to reach its previously stated gross billings targets of $475 million in 2021, $750 million in 2022 and $1.7 billion in 2024.

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Plug Power falls 7% after JPMorgan calls the company ‘fully-valued,’ issues price target below current level

Shell Hydrogen charging point 2019
  • Plug Power fell 7% on Thursday after JPMorgan initiated the hydrogen fuel-cell manufacturer at “neutral” with a $60 price target, representing potential downside of 14% from Wednesdays close.
  • Despite the downside price target, JPMorgan believes Plug Power is a first-mover in what represents a “massive market opportunity” that could be worth $200 billion.
  • Plug Power is “fully-valued but a must own in the hydrogen space,” JPMorgan said.
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Plug Power fell as much as 7% on Thursday after JPMorgan said the hydrogen fuel-cell leader is “fully-valued but a must own in the hydrogen space.”

JPMorgan initiated Plug Power at a “neutral” rating with a $60 price target, representing downside potential of 14% from Wednesday’s close. The price target is based on a discounted 2024 market cap derived from a 60-times enterprise value-to-2025 EBITDA forecast of $534 million. 

Shares of Plug Power have been on a tear in recent months, and year-to-date Plug Power is up 105% as of Wednesday’s close.

Plug Power is a first-mover in the hydrogen space, having developed proven proton exchange membrane technology that powers logistic vehicles for first-rate customers like Walmart and Amazon. The company is capitalizing on what could be a $200 billion total addressable market, JPMorgan said.

Plug Power has a strong balance sheet and planned production scale to capitalize on that opportunity, the note said.

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JPMorgan expects the New York-based company to see a 40% compounded annual growth rate that generates $1.2 billion of gross billings by 2024.

The three big growth opportunities for Plug Power are: 1) expansion of the existing materials-handling franchise, 2) expansion into new markets and verticals including Europe, electric vehicles, and data-center backup power, and 3) green hydrogen, JPMorgan explained.

And a recent partnership between Plug Power and Renault to jointly develop hydrogen-powered electric vehicles could “produce 40% upside to the 2024 revenue target, pushing revenues to $1.7 billion, and cause growth to accelerate in 2025,” JPMorgan said. 

Revenue in 2025 could exceed $2 billion if Plug Power manages to successfully execute on its growth strategy, JPMorgan said, adding that it thinks this “justifies the very high multiples at which the stock trades.”

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