FuelCell Energy Inc. (FCEL) stock plunged to a 27-year low of $0.25 on Thursday. Investors remained concerned about the future of the company, which sells stationary fuel cell power plants for distributed power generation, as they were unsatisfied with the recent first-quarter results.

Majority of the analysts recommended a “strong buy” or “buy” rating while expecting the stock to reach $1.43 per share in the next 52 weeks. They tend to value the company much less than the current scenario and believes FuelCell has fallen to the verge of bankruptcy due to the danger of tripping debt covenants.

Image Courtesy: FuelCell Energy

In the recent first quarter, the company reported a wider loss as the completion of deliveries in fiscal 2018 under a 20-megawatt order for a utility project owned by KOSPO dragged product revenues down. Operating expenses rose 27% due to the spending to complete the development and construction of the SureSource 4000 plant located in Danbury, Connecticut as well as higher professional related and sales and marketing expenditures.

As of January 31, 2019, FuelCell had a contract backlog of about $1.3 billion, up from about $638.5 million as of the previous year. Services and license backlog increased by 63% due to the inclusion of future contracted revenue from routine maintenance and scheduled module exchanges for power plants under service agreements.

Generation backlog soared by 137% as it represents future contracted energy sales under contracted power purchase agreements between the company and the end-user of the power. However, advanced technologies contract backlog dropped by 14% year-over-year.

Pressure mounts

The company is in a crisis of tripping debt covenants and is in urgent need of a short-term capital infusion. It is expected that the company could either enter into another financing transaction or sell portfolio assets. The pressure has been mounting for FuelCell as ongoing massive dilution, upcoming reverse stock split and repay or refinance of near-term debt could create gloomy prospects for the future.

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The stock has remained below $1 since October 10, 2018. This could turn as an invitation for Nasdaq to issue a non-compliance notice. The market experts believe that the stock could turn to trade on the Over the Counter Bulletin Board (OTCBB) or Pink Sheets.

Shares of FuelCell opened higher on Thursday but changed course to the red territory. The stock has fallen over 85% in the past year and over 99% in the past five years.

 

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