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
Dow Jones Industrial Average.
With that big gain, investors have to be ready for some big swings.
Write to Al Root at email@example.com