Fuel cell-powered truck maker Hyzon’s stock suffers record plunge after accounting questions raise

Shares of Hyzon Motors Inc. had been struggling a record plunge towards a record low Friday, after the maker of gas cell-powered vans disclosed a “myriad of issues,” together with accounting regularities that can trigger it to overlook the submitting deadline for second-quarter outcomes.

That prompted plenty of analysts to again away from their bullish stances, together with J.P. Morgan analyst William Peterson who flipped to being the one bearish analyst on Wall Street.

The stock
plummeted 36.5% in very lively afternoon buying and selling Friday, placing it on observe for the worst one-day efficiency because the ticker began buying and selling a yr in the past. It was additionally headed for its lowest-ever shut, under the earlier record low of $2.94 on June 30, 2022.

Trading quantity spiked as much as 15.6 million shares, in contrast with the full-day common of about 1.8 million shares.

The stock was buying and selling 65.5% under the place it closed its first day of buying and selling on the Nasdaq change on July 19, 2021, after the merger with special-purpose acquisition firm (SPAC) Decarbonization Plus Acquisition Corp. closed.

Hyzon disclosed late Thursday in an 8-Okay submitting with the Securities and Exchange Commission that it had begun an investigation into the timing of income recognition and inside accounting controls at its China operations. As a outcome, the corporate mentioned it might not be capable to file its audited 10-Q by the Aug. 15 deadline, which suggests it gained’t be in compliance with the Nasdaq’s itemizing requirement.

“The delay in filing will have no immediate effect on the listing or trading of the company’s common stock, although there can be no assurances that further delays in the filing of the Form 10-Q will not have an impact on the listing or trading of the company’s common stock,” the corporate mentioned in an announcement.

Hyzon has additionally mentioned its board’s audit committee has decided that its 10-Okay annual report for 2021 and its 10-Q for the primary quarter of 2022 “should no longer be relied upon.”

That’s not all. Hyzon additionally mentioned it recognized “operational inefficiencies” at Hyzon Motors Europe B.V., which is its European three way partnership with Holthausen Clean Technology Investments B.V. The firm mentioned the inefficiencies could have “a material adverse effect” on its skill to supply and promote automobiles.

The firm mentioned it now plans to restructure its European operations, and has retained a consulting agency to assist reassess its international methods and operations.

There’s extra: The firm mentioned that again on May 5 it had entered right into a stock buy settlement with Holthausen to purchase about 25% of the shares of the Hyzon Motors Europe JV, which might have given Hyzon a 75% stake within the JV. That deal was anticipated to shut in July, however it hasn’t.

“The company and Holthausen have been unable to finalize the terms of the Holthausen transaction, and the transaction is not expected to close on the terms originally agreed,” Hyzon acknowledged. “The company and Holthausen are currently working to renegotiate the transaction.”

Hyzon mentioned it didn’t know when, or even when, a brand new stock buy settlement could possibly be reached.

J.P. Morgan’s Peterson adopted by double downgrading Hyzon, to underweight from chubby, and withdrawing his stock worth goal. His earlier goal was $6.

Given all of the disclosures, Peterson wrote in a analysis notice that he now believes “investors are unlikely to give credit to the company for having strong core fuel cell technology and an underrated hydrogen strategy, at least for the next several quarters.”

He additionally believes the Hyzon’s authentic “early mover advantage” in gas cell electrical automobiles (FCEVs) is now much less probably given rising competitors, particularly in abroad market in Europe and China.

Wedbush’s Dan Ives additionally downgraded Hyzon, to impartial from outperform, whereas slashing his stock worth goal to $3 from $7.

“There are more questions than answers at the moment with the myriad of issues identified in the filing that we fear could slow down the growth story of Hyzon (that was actually progressing well the last six months) with this black cloud now over the story,” Ives wrote.

Michael Shlisky at D.A. Davidson reduce his ranking to impartial from purchase and his worth goal by two-thirds, to $4 from $12. He mentioned the eventual consequence of the disclosed points could possibly be so simple as minor restatements and an improved European operation, or adjustments could possibly be extra drastic.

“We simply do not know where things will go at this point, and these types of investigations and restructuring actions can be expensive and distracting,” Shilsky wrote. “We are moving to the sidelines until we have more clarity on these matters.”

The stock has plunged 56.1% yr thus far, whereas the S&P 500 index
has misplaced 13.2%.

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