In the most optimistic Scenario for PLUG pumpers … A 50%++ Downside is in the Cards!
I guess you all are familiar with the PLUG's story … so … let's just go directly to the point.
"Based on actual information supplied by ITA members, the US Factory Shipments Through 2012 and US Factory Shipments Through 2012-Bar Graph reveals shipments in the United States for electric rider trucks (Class 1 and Class 2 combined), motorized hand trucks (Class 3) and internal combustion powered trucks (Class 4 and Class 5 combined) since 1983." http://www.indtrk.org/market-intelligence
Well … as you can see … PLUG isn't playing in a booming U.S. industry!! Please, remember that even PLUG defines its potential market at approx. $4b (
Since 1990 total shipments are up only 50% (and down about 24% since the 2006 peak). The annual Growth rate has therefore been 1.84% p.a. over the past 24 years.
The Electric Rider Segment growth has been slightly higher than the sector average, namely … 2.60% p.a. Total Shipments for 2012 were 49,126 Units. A 5% p.a. growth rate starting in 2013 … seems a generous enough assumption to me.
PLUG's Gendrive, an eco-friendly product/technology … is likely to be a competitor to / substitute in … the Electric Riders Category (Classes 1&2).
- 2014 Classes 1&2 Units Shipped = 54,161
- 2014 Gendrive Units Shipped = 3,250
- Gendrive Price = $20,000
- Gendrive sales increase exponentially till 2017 … when Gendrive achieves a 20
- % Market Share. Then, the Market Share remains Constant.
- Service Revenue = 10% of Annual Gendrive Revenue
- Net Income (= FCF) Margin = 15%
- Discount Rate = 12%
Btw … remember … here I am valuing PLUG … assuming a "Best Case" Scenario. What would happen if … problems were to emerge? eh eh eh !
The model is very basic ... and it actually does favor PLUG bulls. According to analysts' estimates, on a 2014FY estimated $63.7m Revenue base … PLUG is expected to book a $9.9m loss
Now you can see why I am building a Short Position in PLUG!
Started Shorting in the $6.70s … shorted in the $8.20s …&… If this crazy market brings it to $12 … I will short even more … down the road!
To me PLUG … just looks like … UNXL … 12 MONTHS AGO! … What do you think?
To learn more about the technology behind Gendrive … I suggest you to have a look at this Seeking Alpha Article:
BTW: The only bullish analyst out there … is from Cowen and Company:
Would you like to guess the name of the Bookrunner of the latest financing?
Yup … that's Cowen.
*ITA's manufacturing Members represent more than 90% of the forklift market in North America.
PS: Current Market Valuation would theoretically only be "reasonable* (but not attractive) … only if the company were to be able to become a major player in the Transportation Refrigeration Units, Ground Support Equipment and Range Extenders industries (currently mentioned as Market Expansion Opportunities for GenDrive Architecture) .
Disclosure: I am short PLUG.
Additional disclosure: and hopefully, this insane Market ... will give me the chance to short more shared at higher prices!