In yesterday’s trading Plug Power Inc (NASDAQ:PLUG) fell by 50% from a high of $11.53 to a low of $5.68 following a crushing report issued by Citron Research that claimed the fair value of the stock should be 50 cents.

Plug Power 5 day

Plug Power: Broken promises and irresponsible forecasts

Calling Plug Power Inc (NASDAQ:PLUG) just a ‘casino stock,’ the report lambasted the litany of broken promises and projections by Plug Power management.

“We dug back further through the past 4 years and beyond – there’s a consistent string of broken promises, and complete unaccountability for management guidance. Just like the above example, the company does not only miss earnings estimates, but are actively and intentionally deceptive in their projections,” alleges the Citron report.

Cash when you can get it

The report is particularly hard on Plug’s freewheeling CEO Andy Marsh, and the company’s propensity to sell stock at the drop of a hat. In a particularly galling instance of CEO-speak meant to deceive, Marsh is quoted in the report as saying the following on February 26:

“The balance sheet’s been the best it’s been since I’ve been with the company. As of at our announcement in mid-January, after raising $30 million, we have $46 million on the balance sheet. We will use about $10 million in operating cash this year, and we will leave this year profitable, and so we see no need for cash to fund the present business plan.”

Yet the company went ahead and made another stock offering worth $22.4M within a week of the above statement. Very clearly, the company chose to ignore the dilutive effects of the issue and grabbed an opportunity to load up on cash when the stock price, and gullible investors, permitted it to do so. It also does not speak very well of the company’s confidence in its business model and forecasts.

Healthy tailwind from supportive research reports

An article by Dr. Hugh Akston in Seeking Alpha points to Cowen analyst Rob Stone’s bullish plugging for PLUG in a research report and boosting the price target on the stock to $5.50 just days before an issue of stock by the company.

“Three days later, the same Cowen & Co. acted as the sole underwriter for Plug Power Inc (NASDAQ:PLUG) equity offering of 3.9m shares. Three days! Cowen shamelessly juiced the stock and then helped PLUG dump 3.9m shares onto the public,” says Dr Akston.”We plan to encourage the SEC to investigate this activity,” he adds.

What the consensus expects tomorrow

Plug Power Inc (NASDAQ:PLUG) is due to declare its Q4 2013 earnings tomorrow at 9:30 am EDT. Analysts expect EPS of (-$0.08) and revenue of $7.45M.

Given that the bull run in the stock has seen huge participation by retail investors and traders, these are weak hands holding the stock (bag?) at these prices.

If the company disappoints, there is a risk of another stampede for the exits, not to mention another gut-wrenching slide in the stock price like yesterday.