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Stock in green-energy provider
FuelCell Energy
was down more than 19% Wednesday morning after the company announced a secondary stock offering well below where shares have been trading.
The Danbury, Conn., company is selling about 20 million shares, raising about $130 million in the process. Some shareholders also sold stock in the offering, but the company doesn’t get any cash from those sales.
The price is $6.50 a share. FuelCell (ticker: FCEL) shares closed at $9.05 on Tuesday. The 28% discount looks steep.
But coming into Wednesday, FuelCell shares are up more than 290% since the U.S. presidential election. Investors have become more excited about hydrogen-related and green technology after Democrat Joe Biden won.
The company makes fuel cells for stationary power applications that can run on a variety of fuels that emit little or no carbon dioxide. The company also has technologies for carbon capture.
FuelCell isn’t profitable yet and management used the strong stock-market action to improve the balance sheet. FuelCell reported $66 million in cash and almost $200 million in debt as of the third quarter. The stock offering essentially wipes out the company’s net debt, which is debt outstanding less cash.
FuelCell also offered a fourth-quarter sales forecast of between $16 million and $17.5 million. Wall Street was looking for about $18.5 million.
Cowen analyst Jeffery Osborne wrote in a Wednesday report that he liked the move to raise cash, but expressed concern that the company is also taking a $2.4 million expense related to a new project. He rates shares Hold and has a $5 price target.
Osborne is one of four analysts who cover the company. Three rate shares Hold and one rates shares Sell. The average analyst price target is $3.25, but only two of the four analysts have official price targets for the stock. Shares were at $7.31 near 10:30 a.m. Eastern time.
Wednesday is shaping up to be a hard lesson for investors. Volatility can beget volatility, in either direction. Even with the premarket drop, FuelCell shares are up about 180% year to date, crushing comparable returns of the
S&P 500
and
Dow Jones Industrial Average.
With that big gain, investors have to be ready for some big swings.
Write to Al Root at allen.root@dowjones.com