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FuelCell Energy (Nasdaq: FCEL) soared over 30% on Dec. 18 after the Danbury-headquartered firm posted better-than-expected financials for its fourth quarter.

In Q4, the company’s backlog also grew to $1.19 billion, indicating solid demand for its technology heading into 2026. However, the underlying fundamentals still narrate a more complicated story.

FCEL shares’ long-standing structural challenges (discussed below) remain firmly in place, raising concerns that this rally may simply prove another short-lived spike in a historically volatile stock.

Worsening EBITDA loss to weigh on FuelCell Energy stock

While the quarterly headline figures sure look encouraging, FuelCell ended fiscal 2025 with about $152 million in EBITDA loss, which is actually worse than a tad above $122 million last year.

This suggests the company isn’t moving toward sustainable profitability – in fact, it’s moving in the opposite direction.

Higher input costs, slow project ramp‑ups, and uneven revenue recognition continue to weigh on margins. Even with revenue growth, FCEL just isn’t generating the operating leverage required to narrow losses.

For investors, this signals that the business is still struggling to scale efficiently – and the path to breakeven remains uncertain.

In short, FuelCell Energy stock remains unattractive as the Nasdaq-listed firm is failing to improve its EBITDA during a period of rising demand, and that raises legitimate concerns about long-term  viability.

Dilution risk remains an overhang for FCEL shares

FuelCell Energy has a long history of funding operations through equity issuance, not cash flow.

This has diluted existing shareholders over time, and despite management’s efforts to reduce cash burn, the company still consumes far more cash than it generates, leaving few financing alternatives.

With limited access to inexpensive debt and no consistent profitability in sight, equity issuance for FCEL remains the most likely tool to bridge funding gaps.

Therefore, investors loading up on FuelCell shares after the earnings face future dilution that could erode their ownership stake and cap upside potential.

Until FuelCell demonstrates a credible path to self‑funding growth, dilution risk will continue to overshadow any near‑term momentum.

FuelCell isn’t leading the pack amid rising competition

The fuel‑cell and hydrogen industries are becoming increasingly crowded, and FuelCell Energy is no longer competing only with niche peers.

Larger, better‑capitalized players such as Bloom Energy, Plug Power, Toyota, and Cummins are aggressively expanding their hydrogen and fuel‑cell portfolios.

These companies benefit from scale, deeper partnerships, and stronger balance sheets – strengths that FuelCell cannot easily match.

As the sector matures, customers are gravitating toward providers with proven reliability, faster deployment capabilities, and long‑term service capacity.

FuelCell risks being squeezed out of high‑value commercial opportunities if it cannot keep pace technologically or financially.

In a capital‑intensive industry where winners consolidate market share, being the smallest competitor is a strategic liability that adds to the case against owning FCEL stock heading into the new year.

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