Citron Research comments on the difference between a cult stock, a dream stock, and a casino stock regarding Plug Power Inc (NASDAQ:PLUG).
Behind the moonshot chart, Citron examines a littany of Plug Power Inc (NASDAQ:PLUG) management’s broken promises, a doomed business model, and some true penny-stock capital raises just last year. With no fundamental changes now or expected in its business model, this one has “bust” written all over it.
Plug Power Inc (NASDAQ:PLUG) – Plugging Into Some Reality:
The first London Value Investor Conference was held in April 2012 and it has since grown to become the largest gathering of Value Investors in Europe, bringing together some of the best investors every year. At this year’s conference, held on May 19th, Simon Brewer, the former CIO of Morgan Stanley and Senior Adviser to Read More
Fair Value of Plug Power is 50 Cents
Can someone please bring me a vodka and some second hand smoke? If we are going to have to hang around in a casino, let’s at least have the experience.
Citron Research understands well the difference between a cult stock, dream stock, and a casino stock:
A cult stock has a devout following people devoted to its products; therefore it can be challenging to assign a valuation. This could be either Tesla or Netflix. Both deliver great products; hence a cult around their shares.
A dream stock is a stock with limitless blue sky. Regardless of current financials, investors can always look to the future. In dreamland, we have many biotechs and stocks in the 3D printing space.
A casino stock, by contrast, is the lowest form of speculative moonshot. A casino stock can trade twice its outstanding shares in a single day, while turning over its entire float on people gambling that they can find a buyer at a higher price … Who really cares about anything else, right? The recent volume and share price surge in Plug Power Inc (NASDAQ:PLUG) demonstrates how Wall Street treats this stock: nothing more than a casino.
Who is behind Plug Power Inc (NASDAQ:PLUG), and what do they do? This is simple: Plug Power sells fuel cell-powered forklifts … with fuel cells they acquire from Ballard Power. Nothing fancy here, folks. Same business model since the 2000 crash … Well over a decade as a public company, during which they have lost close to $850 million, while developing no IP or meaningful revenue growth. Profitability? Forget about it!
Citron will now explain why Plug Power Inc (NASDAQ:PLUG) is eventually headed right back to 50 cents (a blended average of all of their recent capital raises). On Thursday management will issue earnings and guidance. We warn investors. YOU CANNOT TRUST MANAGEMENT GUIDANCE … Not Even a Little Bit. Here is a history of broken promises and failure to deliver of Plug Power over the years:
Plug Final
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Another fact: Citron was also the same “research group” to knock Tesla…now where is Tesla? That’s right, above $300 and they continue to climb.
Now PLUG & BLDP have the opportunity to benefit from Tesla (and possibly BMW). And you can count on them doing so. If you look at the previous years’ trends, you’ll see that they have been narrowing their losses and now that the technology’s cost has been cut nearly in half and big contracts are committed, expect reputable gains for this year.
I learned a long time ago to ignore Citron’s views on many companies. They do a reasonable job analyzing much larger industries, but they tend to miss the mark completely when it comes to anything less.
A completely misguided article. Most likely from investors looking to knock down the stock value for another opportune time to jump in.
Expect these stocks to continue momentum as PLUG beats the expected earnings for the previous quarter. The values of these stocks have seen a significant drop during lunch hours today as many are pulling out as they were in it for the short run. However, the potential of these stocks is phenomenal. Reduced production costs and more orders? You’re $0.50/share is a joke.
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