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Plug Power dives after announcing it will restate financial results

Plug Power GenDrive Fuel Cell with GenFuel hydrogen.
Source: Plug Power

Shares of Plug Power dropped more than 15% during premarket trading on Wednesday after the company said it will restate financial results following accounting errors.

In a filing with the Securities and Exchange Commission on Tuesday evening, the fuel cell maker said it will restate financial statements for fiscal years 2018 and 2019, as well as quarterly filings for 2019 and 2020.

The company said the accounting errors are primarily related to areas including the impairment of certain long-lived assets, as well as loss accruals for certain service contracts.

“There is no expected impact to our cash position, business operations or economics of commercial arrangements,” Plug Power said in the filing, adding that the review did not find any misconduct.

The company said no issues were raised ahead of its fourth quarter 2020 and year-end preliminary results, which were announced on Feb. 25. The filing added that the updated results will be made public as soon as possible, but did not give a specific date.

The Latham, New York-based company has been a popular name among retail investors, and has been the subject of discussion on Reddit’s WallStreetBets forum.

Shares of the company, which went public in 1999, soared more than 970% in 2020. The strength continued into 2021, and the stock hit an intraday high of $75.49 on Jan. 26 — its highest level in at least a decade.

Hydrogen fuel cell maker Plug Power’s stock over the last decade

Amid the stock’s strength, CEO Andy Marsh sold more than $37 million worth of his position, according to a filing with the SEC dated Jan. 21. The filing stated that the earliest sale was on Jan. 19, with Marsh’s selling price ranging from $62.25 to $68.43. The filing notes that the transactions were pursuant to a pre-established 10b5-1 trading plan, which allows insiders to sell stock.

Even with the stock’s recent jump, shares are still 97% below their $1,565 per share all-time high from the height of the dotcom bubble in 2000.

Wednesday’s sharp decline elicited a mixed response from Wall Street analysts.

Truist cut the stock to a hold rating, citing a lack of near-term opportunity. “We see limited upside until resolution, particularly amidst a broader rerate in alternative energy-oriented equities,” analysts led by Tristan Richardson wrote in a note to clients. The firm also slashed its target from $65 to $42, which is around where the stock closed on Tuesday.

On the flip side Canaccord Genuity, B. Riley and Roth Capital Partners, all of which have a buy rating on the stock, said the pullback in shares creates an attractive entry point for investors.

“We see Plug’s accounting restatement as creating a major buying opportunity. … Growth investors will have an opportunity today to buy shares in PLUG, where we see abundant catalysts for 2021 that we expect to rapidly restore valuation,” noted Craig Irwin from Roth Capital.

He pointed to Plug Power’s initiatives around fuel cell trucks as well as small stationary fuel cells as among the upside catalysts.

The average Street rating on the stock is overweight, while the average price target is $63, according to estimates compiled by FactSet.

The stock closed at $42.68 on Tuesday, and shares are up 26% for the year through Tuesday’s close.

– CNBC’s Michael Bloom contributed reporting.