Why Shares Of Plug Power Are Down By 15% Today?

Plug Power Video 17.03.21.

Plug Power Stock Drops As The Company Admits It Made Accounting Errors

Shares of Plug Power found themselves under strong pressure after the company stated that its previous financial reports for financial years 2018 and 2019 contained accounting errors.

As a result, the company will not be able to file its annual report for 2020 as it will have to restate its financial statements for previous years. Plug Power also noted that revisions should not impact its cash on the balance sheet.

Currently, the stock is down by about 15% in today’s trading session. Plug Power shares experienced a strong rally at the beginning of this year and made an attempt to settle above the $75 level but then lost momentum and pulled back together with many other high-flying stocks. Still, Plug Power shares are in the positive territory this year even after today’s drop.

What’s Next For Plug Power?

The market is typically sensitive to errors in accounting. According to the company’s SEC filing, these errors included the reported book value of right of use assets and related finance obligations, loss acrruals for certain service contracts, impairment of certain long-lived assets and classification of certain expenses. This is a long list, so the market’s reaction is understandable.

It remains to be seen whether the current pullback will attract those traders who missed the previous rally and were willing to buy Plug Power shares at lower levels.

The absence of impact on the company’s cash on the balance sheet is a positive sign but the market may prefer to wait for more details about the nature of Plug Power’s accounting errors.

Currently, analysts do not expect that the company will be profitable in 2021 and 2022, which means that traders were betting on Plug Power’s strong growth. If this strong growth is put under question together with the company’s financial statements, the pullback will continue.

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