power plugPLUGShares plunged on Friday after the hydrogen fuel cell developer warned it may not be able to continue operations amid supply chain disruptions and a serious cash burn.
Plug Power, which provides fuel cells for electrified commercial vehicles used by AmazonAMZNand WalmartWMTalso posted weaker-than-expected third-quarter sales of $199 million last night, thanks in part to what it described as “unprecedented hydrogen supply challenges” in the North American hydrogen market.
However, in a subsequent filing with the Securities and Exchange Commission, Plug Power also added that given its current cash position and expected capital spending, there are “substantial doubts about the Company’s ability to continue as a going concern.” “.
The group is seeking a $1.5 billion loan from the Department of Energy, as part of financing its green hydrogen network, but funds are unlikely to reach the Latham, New York-based group until early next year. .
“To alleviate conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern, management is currently evaluating several different options to improve the Company’s liquidity position, including the sale of securities, the contraction debt or other financing alternative.” Plug Power said.
“The Company’s plan includes various third-party financing solutions with a particular focus on corporate-level debt solutions, project financing related to investment tax credits and loan guarantee programs, and/or infrastructure project financing of large-scale hydrogen generation,” Plug Power added in the 10-Q presentation.
Plug Power shares fell 28.8% in premarket trading, indicating an opening price of $4.22 each.
KeyBanc Capital Markets analyst Sangita Jain, who gives a “sector weight” rating to Plug Power shares, said the lack of a detailed financial plan amid the “going concern” warning is concerning.
“Management reiterated the myriad options being considered, including project financing, ABL, advances against restricted cash and inventory reduction,” he said. “But nothing has been decided despite high cash burn and the balance of unrestricted cash and available-for-sale securities declining from $2 billion at the end of last year to around $500 million at the end of the third quarter”.
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