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Decarbonisation of the economy Trending topic on the stock exchanges
Plug Power, Lordstown and Nikola allegedly under pressure
Investor confidence in dangerFor years it has become more and more apparent that internal combustion engines will be a thing of the past in the long term. In order to slow down climate change and keep the world liveable for future generations, a rethink in terms of drive types is essential. Many investors on the stock markets have already understood this and have given hydrogen and electric car manufacturers some advance praise in particular. Clean energy is the future issue and no investor would want to miss this trend and discover the new Tesla too late.
On the one hand, this is good news because the move to greener technologies is costly and requires high investments. The market capitalizations of numerous hydrogen and electric companies, which have skyrocketed in a very short period of time, show that market participants are quite willing to do business here and invest in the forms of energy of the future.
The whole thing becomes difficult, however, when it turns out that the promising future prospects of said companies are not what they want investors to believe. The examples of such cases have unfortunately increased in the recent past.
Errors in the balance sheet shock Plug Power investors
For example, there is the hydrogen high-flyer Plug Power. The fuel cell maker has soared on the stock exchange earlier this year, rocketing to a record high of $ 75.49, while the stock ended 2020 at $ 33.91. Other companies in the sector such as Ballard Power, NEL or FuelCell Energy were also delighted with substantial price gains on the stock exchange. However, the price rocket was followed only a short time later by disillusionment. In March, for example, Plug Power reported that the auditing company KPMG had found errors in the company’s balance sheet, which meant that the annual financial statements had to be corrected. Unsurprisingly, this was not well received by investors.
Lordstown is selling pre-order numbers, according to Hindenburg Research
But the hydrogen expert is not the only one who recently came around the corner with bad news. The electric car maker Lordstown was recently targeted by Shortseller Hindenburg Research and faced serious allegations: The car manufacturer is said to have paid consulting firms to pretend pre-orders for its not yet available pickup truck. In truth, the Lordstown Endurance model is still three to four years away from production. Unsurprisingly, after the allegations were published, the stock slumped to $ 13.65 in mid-March and has since followed a downtrend. For comparison: the 52-week high marked the Lordstown share in September 2020 at 31.80 US dollars. In addition, on the occasion of its balance sheet presentation, the EV company informed that the US stock exchange regulator SEC is now investigating the allegations of fraud on the part of Hindenburg Research.
Nikola gert under pressure after allegations of fraud
And electrical startup Nikola should not go unmentioned in connection with highly acclaimed tech companies that are confronted with serious problems. The EV producer was also exposed to an attack by Hindenburg Research, with Nikola founder Trevor Milton in particular coming under heavy pressure. This ultimately also resulted in his departure from the company. However, with the allegations, the company also fled some lucrative collaborations, such as the planned collaboration with traditional automaker General Motors. In addition, Nikola shares recently stumbled after the South Korean Hanwha Group disclosed to the SEC that it wanted to sell half of its Nikola stake. Around eleven million shares are to be sold, which corresponds to a total of around 151 million US dollars, based on the current price of the share of 13.79 US dollars (closing price on March 29, 2021).
Even though each of the companies mentioned here has been trying to win back the favor of investors since the problems became known, this also shows how fragile investor trust in a company ultimately remains, as Bloomberg columnist Chris Bryant argues. On the one hand, the desire to find the new high-altitude flyer is, as expected, very high, but the risk of going wrong is inevitable. If, however, the impression arises that smaller companies are making great promises to investors without being able to fulfill them within the specified time frame, this, in his opinion, jeopardizes investor confidence. It is of course essential that the market participants can continue to rely on the financial statements of the companies.
However, if this trust were shaken by the number of fraudulent cases or investigations, this could also slow down the necessary energy transition towards more environmentally friendly technologies.
Finanzen.net editorial team
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