Plug Power Inc (NASDAQ:PLUG) shares have plunged in value in the last few days on worries that Fuel Cells may never be a viable solution to energy worries, and a new offering of shares cut the value of outstanding holdings in the firm. The company sold 22,600,000 shares at $5.50 according to a press release it put out earlier today.

Plug Power

Where the company found investors to buy those shares at $5.50 it is not clear. The company’s stock opened at 44.83 per share on Wednesday morning, and have not traded at $5.50 since last Friday. Plug Power Inc (NASDAQ:PLUG) has the kind of problems that cost shareholders 37% of the value of their holdings in the last five trading days, and management’s way of dealing with those problems may not be all that attractive.

Plug Power dilution becomes a problem

The release on the share offering said that “Plug Power intends to use the net proceeds of the offering for working capital and other general corporate purposes, which may include capital expenditures and potential acquisitions.” The company is currently burning cash, and its position offers little chance of selling debt at a reasonable interest rate.

Plug Power Inc (NASDAQ:PLUG) needed to find some way of getting the money to continue operations, but its shareholders must be increasingly nervous about management’s continued dilution of their holdings. the firm had 38.2 million outstanding shares at the end of 2012. It has about 144 million outstanding before today’s offering, and now has lost to 170 million shares out there, an expansion of more than four times.

While the company’s stock was going upward, dilution wasn’t all that bad. The company’s shareholders were better off in the share price surge of the beginning of 2014 than they were at the end of 2012. they’re still better off, but the company’s shares are trending downward and that leads to questions being asked about the business.

Plug Power deals with impossible future

The use of fuel cells, the likes of which Plug Power Inc (NASDAQ:PLUG) works with, is still a speculative industry. Batteries appear to be a significantly limited way of storing and transporting energy, but that doesn’t mean the fuel cell is the answer to the world’s energy problems. One analyst did a lot to burst that bubble on Monday last.

Trip Chowdhry of Global Equities Research released a report earlier this week that laid out the plan for the use of fuel cells in vehicles, and proceeded to tear it apart. Plug Power Inc (NASDAQ:PLUG) is just one of many company’s chasing a dream that Mr. Chowdhry reckons might be close to impossible. The company is now valued at more than $650 million, quite a lot for an industry that might be impossible to succeed in.

Plug Power Inc (NASDAQ:PLUG) lost more than 4% of its value in trading on Wednesday morning. The company may be in for more losses unless management can convince the market that the dissolution of shares is leading to the creation of actual revenue streams. A share bought in 2012 only represent a quarter of its original voting power today. Dissolution furthering that debasing process may be difficult to push without real results.