Plug Power (PLUG) CEO Andy Marsh confidently addressed Wall Street concerns over the hydrogen fuel cell company’s future post PLUG stock’s sharp drop due to the company’s going concern warning.
“We feel pretty confident when we look at everything,” Marsh stated to Yahoo Finance (video above). “When we look at our ability to manage through this, we’re going to be fine. We’re talking to folks about opportunities to raise cash much larger than what we need. And we’re just trying to do it prudently so that our investors are in a good position in the long run.”
Plug Power’s shares slid following weaker-than-anticipated results and the company’s “going concern” warning about its potential inability to fund operations over the next year.
“In light of the company’s projected capital expenditure and operating requirements under its current business plan, the company is projecting that its existing cash and available for sale and equity securities will not be sufficient to fund its operations through the next twelve months,” the company wrote in a filing published Thursday. “These conditions and events raise substantial doubt about the company’s ability to continue as a going concern.”
Marsh painted a brighter picture of the company’s outlook, saying the firm planned to move “prudently” so investors “are in a good position in the long run.” He emphasized that the company had “zero debt” along with a “$5 billion unleveraged balance sheet.” Marsh also said Plug Power is considering a range of options, including debt financing to raise $500 million, as well as slowing down plant openings.
“I’d be disingenuous if I didn’t say this has been a bump on the road,” Marsh said. “But we have strong demand by major customers.”
Plug shares have fallen more than 70% year-to-date, as clean energy stocks take an outsized beating, driven by concerns about higher rates in a capital intensive sector, and falling valuations.
Marsh added that “if the market was growing a little bit faster, it would be easier.”
Plug Power reported a loss of $0.47 per share in the third quarter, steeper than the $0.30-per-share loss expected by Wall Street. Net revenue for the quarter came in at $198.7 million. The company’s net loss in the quarter totaled $283.5 million.
The company attributed the loss to “unprecedented supply challenges” for hydrogen, which resulted in volume constraints and deployment delays. The disruptions coincide with Plug’s plan to launch two new green hydrogen production plants in Georgia and Louisiana. Marsh stated that the Georgia plant alone, set to open by year-end, would be enough to alleviate the pressure.
Following the results, JPMorgan, Oppenheimer, and RBC Capital downgraded the stock and lowered their price targets.
“While we believe Plug Power can cycle past its current cash flow issues, the current operating and capital markets environments are challenging,” JPMorgan’s Bill Peterson wrote in a note to clients. The analyst downgraded the stock to Neutral and lowered his price target to $6 from $10 per share.
Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter @AkikoFujita.
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