What Happened?
Shares of carbonate fuel cell technology developer FuelCell Energy (NASDAQ:FCEL)
fell 12.2% in the pre-market session after the company reported weak first-quarter results: its revenue missed expectations, and EBITDA fell short of Wall Street's estimates.
On a brighter note, FCEL recorded a sharp improvement in backlog, which surged 28% year on year, driven by the long-term service agreement with Gyeonggi Green Energy in Korea. This agreement is expected to drive future revenue.
Despite this, sales growth was more modest during the quarter, up 14% compared to the prior year, led by growth in generation and advanced technologies. However, profitability remained a concern as operating losses narrowed but remained significant.
Looking ahead, management guided for top line growth to improve. Still, this was a soft quarter.
After the initial drop the shares shed some of the losses and close the day $6.56, up 3.1% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy FuelCell Energy? Access our full analysis report here, it’s free.
What The Market Is Telling Us
FuelCell Energy’s shares are extremely volatile and have had 95 moves greater than 5% over the last year. But moves this big are rare even for FuelCell Energy and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 2 months ago when the stock gained 17.8% on the news that the Biden administration announced new rules clarifying that some nuclear power plants could secure tax credits for producing clean hydrogen if the credits help keep reactors running. This announcement meant more funding opportunities for hydrogen producers despite some opposition from environmental groups regarding the use of nuclear to produce hydrogen. The update also provided more certainty for investors and related companies within the clean energy space.
FuelCell Energy is down 36.5% since the beginning of the year, and at $6.58 per share, it is trading 81.9% below its 52-week high of $36.30 from April 2024. Investors who bought $1,000 worth of FuelCell Energy’s shares 5 years ago would now be looking at an investment worth $149.21.
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