Shares of plug-power (PLUG) – Request report fell Wednesday after institutional investor Kerrisdale Capital announced a short position in the hydrogen fuel cell maker, which has risen to a valuation of nearly $ 40 billion in recent months.
In a letter announcing the short position, the New York investment manager cites Plug’s valuation, saying the company generated a “meager” $ 300 million in revenue in 2020.
The stock is trading at 40 times Plug’s sales forecasts for 2024, which Kerrisdale calls “ aggressive. ”
“But it’s all just a dream, because ‘green’ hydrogen is too expensive and inefficient to produce, store, transport and burn,” the company letter said.
“It’s not because of inefficiency in manufacturing or an imaginary S-curve of the technology that has yet to scale. It’s because of the laws of physics that we don’t expect Plug to be able to successfully beat.”
Plug’s short-term stake is 16% according to S3 Partners, with shares up more than 1,400% over the past 12 months.
Currently, Plug’s only positive business segments are its hydrogen forklift trucks, which Kerrisdale says is “almost comical” given their appreciation.
Despite its stance that the forklift industry is not large enough to warrant Plug’s valuation, the company says there is a total addressable market of $ 30 billion and there are 1.5 million forklift purchases annually.
But hydrogen fuel cells are destined to lose out to lithium-ion batteries, which Kerrisdale says “have already demonstrated their value proposition for forklift trucks and are quickly going to dominate the market.”
Kerrisdale also throws cold water on the partnerships that Plug has signed over the past two weeks, calling them a sign of weakness rather than strength.
“These ‘big’ deals should be seen in the context of all the ‘big’ deals from the past that never materialized,” Kerrisdale said.
Plug shares in the latest check were down 7.7% to $ 61.35.