Power supply actions with plug (SNUFF) – Get the report fell on Wednesday after institutional investor Kerrisdale Capital announced a short position in the hydrogen fuel cell maker, which reached a valuation of nearly $ 40 billion in recent months.
In a letter announcing the short position, the New York investment manager quotes Plug’s assessment as saying that the company generated “insignificant” revenue of $ 300 million in 2020.
The shares are traded 40 times with the Plug revenue projections for 2024, which Kerrisdale calls “aggressive”.
“But everything is just a pipe dream, because” green “hydrogen is too expensive and too inefficient to produce, store, transport and burn,” the company letter said.
“This is not because of manufacturing inefficiencies or an imaginary technological S-curve that has not yet been scaled. It’s because of the laws of physics, which we don’t expect Plug to successfully defeat. ”
Plug’s short interest rate is 16%, according to S3 Partners, with shares rising by more than 1,400% in the last 12 months.
Currently, Plug’s only positive business segment is its hydrogen-powered forklifts, which is “almost comical” given its rating, according to Kerrisdale.
Despite its position that the forklift industry is not large enough to justify Plug’s valuation, the company says there is a total addressable market of $ 30 billion and 1.5 million annual forklift purchases.
But hydrogen fuel cells are destined to be lost due to lithium-ion batteries, which Kerrisdale says have “already demonstrated their value proposition for forklifts and are quickly dominating the market.”
Kerrisdale also throws cold water on the partnerships Plug has signed over the past two weeks, calling them a sign of weakness rather than strength.
“These ‘major’ transactions should be seen in the context of all the ‘major’ transactions in the past, which have never bothered us,” Kerrisdale said.
Plow shares at the last check fell 7.7% to $ 61.35.