FuelCell Energy (FCEL) – the Company Pioneering Hydrogen Fuel Cells – Tumbles Over 20% Today as Investors Await Q2 2020 Earnings
FuelCell Energy (NASDAQ:FCEL) has been around for the better part of five decades. However, the company’s underlying technology has never been as close to commercial viability as it is today, spurred by companies such as Nikola Corporation (NASDAQ:NKLA) that are working to introduce fuel cell-based EVs. Nonetheless, FuelCell Energy is still a considerable way off from its mainstream goals, thereby, giving rise to volatility in its stock price.
This volatility is in full swing today as FuelCell has plunged by 23.45 percent to $2.58, as of 12:42 p.m. ET. This price level corresponds to a current market capitalization of around $528 million. However, it is important to understand the context of FuelCell’s recent price action. Since bottoming at $1.09 on the 12th of March, the company’s stock price has registered a cumulative gain of 209 percent! Even after subtracting today’s plunge, the stock is still up by a healthy 136.7 percent. Year to date, the stock remains in the black by 28.36 percent relative to the current share price.
Of course, the carnage being witnessed in the broader market today is partly to blame for the plunge in FuelCell’s stock price. As a refresher, the Dow Jones Industrial Average (DJIA) is down 5.51 percent or $1,492 points today while the NASDAQ 100 index is down by 3.87 percent. This carnage has been precipitated by fears of a second wave of coronavirus (COVID-19) infections as Texas has reported three consecutive days of record pandemic-related hospitalizations while nine California counties are also witnessing a spike in COVID-19 cases. Moreover, the Fed Chairman Jerome Powell has also added a cautionary note to market’s euphoria by suggesting yesterday that the unemployment rate in the U.S. would tabulate just south of 10 percent by the end of 2020, painting a justifiably horrific picture regarding the economic health of the country.
Regardless, the macroeconomic picture forms just part of FuelCell’s current stock price action. Investors appear to be adopting a cautious tone as the company gears up to announce its Q2 2020 earnings tomorrow. As per consensus estimates, the company is expected to report $12.90 million in revenue, corresponding to a 39.9 percent surge relative to the comparable quarter last year.
(All figures are in millions of dollars)
Moreover, FuelCell is widely expected to report a quarterly loss of $0.06, translating to a 97.1 percent improvement in the bottom-line metric relative to the corresponding quarter in 2019.
FuelCell investors will also be looking for additional details regarding its future plans. Bear in mind that the company had announced on the 4th of May the initiation of construction work at the site designated for its 1.4 MW SureSource 1500 biofuels fuel cell project with the City of San Bernardino Municipal Water Department in California. The company is already working with ExxonMobil Research and Engineering Company (EMRE) via a joint development agreement on an Advanced Technologies contract. In Q1 2020, FuelCell earned $5.2 million through this venture. Additionally, as Nikola and others work to incorporate the hydrogen fuel cell technology in their product offerings, it would be interesting to gauge how FuelCell plans to benefit from the increasing momentum in the industry. As an illustration, the CEO of Nikola Motors, Trevor Milton, tweeted a set of interesting information yesterday, detailing how the hydrogen fuel cell will become an integral component of the electric truck maker’s plans to gain commercial viability.
BEV is 500 miles *2.1 kWh/mile =1,050 kWh used x $.23 kWh (CA rates to charge under 2 hours) = $241 and BEV weighs 10,000 more and takes 8x as long to not damage batteries (2 hours charge)
— Trevor Milton (@nikolatrevor) June 10, 2020
He went on to note:
Before anyone goes and slams me about cost of hydrogen, we don't produce it in the city, we do it behind the meter at about $.04 / kWh on PPP clean energy. That's why hydrogen makes sense for long haul. You're not fighting utilities and rates.
— Trevor Milton (@nikolatrevor) June 10, 2020
Readers should remember that hydrogen fuel cell technology does have its detractors. Given that this technology is currently in its nascent stage, requires a tremendous investment in refueling station infrastructure, and is generally unviable from a commercial standpoint at the present time, there is some merit in the associated cynicism. Until the technology proves its worth, FuelCell Energy will likely remain vulnerable to wild stock price gyrations.