Plug Power Inc (NASDAQ:PLUG) and Ballard Power Systems Inc. (USA) (NASDAQ:BLDP) shares were down on today’s market after another Fuel Cell hopeful, a private company named ClearEdge, filed for bankruptcy earlier today. The firm’s shares had lost more than 4% of their value at time of writing as investors questioned the growth potential of the companies in a week that has been extremely hard on the industry as a whole.
According to a report from Street Insider earlier today California fuel cell manufacturer ClearEdge Power filed for a Chapter-11 bankruptcy in the state earlier today. The company said in the filing that it owes around $16.6 million to its 20 largest unsecured creditors. The company reportedly shut its door to employees on April 24th, without explanation.
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Earlier this month, Greylock Capital Associates, an emerging markets hedge fund, filed for bankruptcy protection in New York assets under management dwindled from nearly $1 billion in 2017 to $450 million at the end of 2020. After three years of losses, Bloomberg reported that assets could drop below $100 million by the end of the Read More
ClearEdge fails in fuel cell industry
After a company closes its doors to employees, the writing is usually on the wall. An attorney for the firm apparently told State officials that a contract it had hoped to sign with a major partner had fallen through, and that had created a cash shortfall. That shortfall’s impact on the firm is apparent today, and it seems that the employees who were refused entry last month will have a tough time getting back into the building.
ClearEdge owed millions of dollars to several creditors at the time it went bankrupt. Some of those creditors were its parts suppliers and the other businesses it dealt with on a regular basis, but at least $1.5 million of the company’s debt is owed to the State of California. According to the Hartford Business Journal, the State Bond Commission approved a loan of that sum to the company, though part of it would have been forgiven had the company retained at least 17 employees for at least three years.
ClearEdge doesn’t have the weighty influence in the fuel cell industry that companies like Plug Power Inc (NASDAQ:PLUG) and Ballard Power Systems Inc. (USA) (NASDAQ:BLDP) do, but this has been an especially bad week for the industry, and the heightening negativity around the future usability of the technology, coupled with the financial positions of the companies themselves, makes this bankruptcy hit particularly hard.
Plug Power disappoints investors
In the last five days, Plug Power Inc (NASDAQ:PLUG) has lost more than 15% of its value. Ballard Power Systems Inc. (USA) (NASDAQ:BLDP) has lost more than 13% of its value in the same period. A report that undermined the growth plans for the entire fuel cell industry, which was published on Monday, is blamed for much of the loss in value, but today’s news was also having an impact on the fortunes of investors.
Plug Power Inc (NASDAQ:PLUG) chose to dilute the holdings of its shareholders again this week in order to raise funds for investment in its business. ClearEdge did not have that ability, and its inability to raise cash led directly to today’s bankruptcy.
It’s clear that some investors are still holding onto the dream of an auto industry powered by the kind of fuel cells that Plug Power Inc (NASDAQ:PLUG) sells, but it’s not clear if that dream is even a remote possibility. Both it and Ballard Power Systems Inc. (USA) (NASDAQ:BLDP) must tread lightly and show investors something like a strong revenue stream if they want to avoid the fate of ClearEdge.