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Plug Power (Nasdaq: PLUG), a company that develops hydrogen fuel cell systems, saw its stock price crash sharply by more than 34.7% at Friday’s market open following a concerning Q3 earnings report. The nosedive caused a broader market sell-off, with stocks like FuelCell Energy (Nasdaq: FCEL) and Ballard Power Systems (Nasdaq: BLDP) declining at the time of writing.  

Plug Power Rings Alarm Bells Amid Dire Need for Funding 

Plug Power shares crashed almost 35% at the last market open this week after the hydrogen technology developer warned about its financial health in its Q3 financial report. The stock fell as low as $3.70 – the lowest point over three years. 

Plug posted third-quarter sales of around $200 million, up 5.4% year-over-year, but missing the consensus estimates by about $23 million. Loss per share in the three-month period stood at $0.47, short of Wall Street’s expectations by $0.16.

The latest quarterly report leaves around $500 million in sales for Plug to generate in the fourth quarter to reach its full-year forecast of between $1.2 billion and $1.4 billion. However, it’s not the concerning Q4 outlook that caused the stock price crash.

The Latham, New York maker of hydrogen fuel cell systems said it faced “unprecedented supply challenges,” which led to hydrogen shortages. This is in addition to the inflationary pressures the company faced.

And while Plug expects supply constraints to ease in the final weeks of 2023, the most pressing concern is its dire need for fresh funding. As such, Plug issued a “going concern” warning in the Q3 release. This refers to an accounting term that signals “a substantial doubt the company can continue to conduct its normal business operations in the foreseeable future without having to liquidate a portion of its assets and/or restructure its obligations,” said accounting expert Robert Willens.

In this light, RBC Capital Markets analyst Chris Dendrions estimated Plug may need $750 million in additional funding to refresh its liquidity over the next 12 months. 

Broader hydrogen market sell-off

The abrupt crash in Plug Power’s shares caused a spill-over effect in the wider hydrogen market, sending some other related stocks into the red.

Shares of FuelCell Energy slipped 1.75% at the opening bell to $1.09, while Ballard Power Systems fell 0.9% to $3.43. Meanwhile, the broader S&P 500 index opened 0.5% higher to 4,368, marking a noteworthy recovery after recent declines.

Hydrogen companies have been a hot topic recently, given numerous predictions that this element, due to its specific features, will play a crucial role in the global clean energy transition. 

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