Plug Power Inc, Ballard Power Systems Fall On ClearEdge’s Bankruptcy News

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.

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.

 

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Paul Shea
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2 Comments on "Plug Power Inc, Ballard Power Systems Fall On ClearEdge’s Bankruptcy News"

  1. Here is your answer methinks:

    http://www.marketsemerging.com/plug-power-inc-nasdaqplug-5-other-worst-stocks-today-tyson-foods-inc-tsn-broadsoft-inc-bsft-jpmorgan-chase-jpm-pfizer-inc-pfe-target-corporation-tgt/177859/

    According to the above article
    the reason why the stock is tanking is because a NASDAQ breaker was
    tripped because there are so many short sellers playing with this
    stock. IMHO this stock has never been worth what it was trading at – it
    jumped from fifty cents to over ten dollars in weeks. I think it quick
    rise and now quick fall is merely because of speculators and short
    sellers gambling on the fuel cell craze and now we are seeing the
    current value reflective of the people who have been holding this stock long term now that the short sellers are bowing out.

    THe sad thing is there are other companies in this industry that are doing good things and what these people are doing with this stock gives the entire industry a bad rap.

    This stock has just been a plaything for them. ANother strange thing is that this company has never made a profit although they have been in business over ten years and yet they are trying to raise more money by selling more stock. If they have not made the money after ten years I doubt they ever will.

  2. One company an industry does not make. There’s always a bad apple in the bushel as the saying goes. To make a blank statement as to cause of an entire industry without giving more detail as to management, patents in the pipeline etc is as speculative as to buy shares in the stocks mentioned. The question that most generally enthalls me is how much money will management walk off with or will they do go belly up. Did they have a viable product or just ideas? If an investor is selling off Plug and Ballard on this news then maybe another pastime is in the cards for them. Incidentally, what about the biggies that were just involved in the share offering by PLUG. Did they get rid of their stock as soon as it was issued to them. Why would a Morgan Stanley or a Barclay and the others even be a part of a stock that’s so hammered by a lot of analyst? Don’t they have a reputation they care about?

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