By now youve heard the news: On Tuesday, the U.S. Senate passed (its version of) the long-awaited $1.2 trillion infrastructure bill, containing at least $9 billion in funding for various fuel cell technologies and billions more for clean energy in general.
Fuel cell stocks reacted positively to the news yesterday, but so far this morning, sentiment appears to be running in the opposite direction. In Wednesday trading, 11:20 a.m. EDT, shares of fuel cell leaders Bloom Energy (NYSE: BE) and Plug Power (NASDAQ: PLUG) were down about 6.4% each.
Image source: Getty Images.
Why are the fuel cell stocks plummeting this morning? In the absence of any specific bad news (and there doesnt seem to be any), I suspect this is an example of investors practicing the investing maxim Buy the rumor, sell the news.
Up until the infrastructure bill passed, investors were able to bid up fuel cell stocks in anticipation of good news. Now that the good news has arrived, however, whats left to hope for?
Profits? Perhaps. Neither of these companies has reported a GAAP profit anytime in the last 20 years, of course, but I suppose the addition of billions of dollars in government support could change that. On the other hand, though, even that government support isnt assured, because while the Senate may have passed the infrastructure bill, the House of Representatives has yet to vote on it -- and might vote no.
Another rumor/news dynamic may be pressing Freyr Battery even lower. Just this morning, you see, The Wall Street Journal featured Freyr Battery in an article on the cheap, green, geopolitical future of batteries and hailed the Norwegian stock as a builder of battery gigafactories that will run on cheap, abundant, local hydroelectric power.
Citing projections from Freyr itself, the WSJ mused that the company looks cheap at a valuation of just 0.8 times projected 2025 earnings before interest, taxes, depreciation, and amortization (EBITDA) and said the company was below the radar -- but predicted that might not last.
Indeed, it didnt last long at all. While you might have expected such a bullish piece in the Journal to send Freyr stock flying today, instead, the shares cratered.
So is this another case of Buy the rumor, sell the news? Perhaps. But it might also be a case of investors checking in on Freyr to confirm what the Journal just told them, and not liking what they see. SEC filings by the company, you see, show that Freyr is currently unprofitable, having lost $0.06 per share last year, and getting even more so over time -- having lost another $0.06 per share in Q1 2021 alone.
Whatever might happen in 2025, Freyrs not at all a profitable business today, and todays share sell-off reflects that fact.
10 stocks we like better than FREYR Battery
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and FREYR Battery wasnt one of them! Thats right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of August 9, 2021
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the worlds greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The companys name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.
Find us at the office
Blotner- Kwas street no. 55, 39246 Canberra, Australia
Give us a ring
+78 715 483 676
Mon - Fri, 10:00-22:00