Do not reach into the falling knife
In the past few weeks, we had consistently and repeatedly on an overvaluation and massive bubbles forming in the shares of Nel ASA (ISIN: NO0010081235; WKN: A0B733), Plug Power (ISIN: US72919P2020; WKN: A1JA81) and Ballard Power (ISIN: CA0585861085; ISIN: A0RENB). In addition, we noted in an article dated February 23, 2021 that all three values are heavily damaged from a technical point of view. In the meantime, all papers have massively lost in value, although the pressure to sell has continued unabated today. At the same time, all stocks have high trading volumes, which shows that this move is anything but short-term.
Even if these hydrogen stocks now appear optically favorable, we would still like to warn against reaching into the falling knife. In fact, the shares of Nel Asa, Plug Power and Ballard Power are still extremely overvalued with an estimated 2021 KUV of 31, 48 and 52, with all companies likely to post significant net losses for some time to come. In addition, due to the now massive downward dynamic, a bottoming out of the share certificates is not discernible, although a short-term technical reaction is possible at any time.
Much stronger competitive pressure in the future
Even if the companies undoubtedly have very innovative and future-proof technologies, it is unrealistic to assume that they will still be among the pioneers in the industry in 5 years’ time or that they will even dominate in terms of market share. Rather, it is already apparent that more and more large corporations are entering this market with large sums of money, as they too see great commercial potential here in the long term. Accordingly, there is a risk that the currently relatively small players will fall behind more and more in the medium term.
In addition, the alternative forms of propulsion sector was celebrated with great enthusiasm on Wall Street, but also on other stock exchanges, so that many speculative investors got into these stocks at very high prices. With the latest price losses, buyers in particular are now being pushed out of the market, who have bet on further rising prices with leverage and now have to fear the so-called margin calls.
In view of the still extremely high valuation and the battered chart technical constitution, a bet on rising prices is very risky. Rather, we estimate the chances of short sellers to be far better here. Certainly, there can be a short-term but sharp technical backlash with the papers at any time, but this is not a major purchase argument for long-term investors.
05.03.2021 – Tim Rademacher – [email protected]
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