Accounting Un-Plugged
Happy St. Paddy’s Day!
By the time you read this, I’m probably halfway through a pint of Guinness or knocking back some Jameson … or both, after looking at Plug Power’s (Nasdaq: PLUG) news today.
Good thing for you, I wrote Great Stuff earlier. What? We’re all Irish today, right?
Anywho … Plug Power. The luck o’ the Irish certainly isn’t with this hydrogen titan lately. At one point, this Great Stuff Picks holding was up more than 400% since its October 2020 addition to the portfolio. What in tarnation happened?
Well, a market shift away from growth stocks and into value stocks was responsible for about 37% of PLUG’s decline this year. We can blame interest rate fears for that one.
But, in the grand scheme of things, those fears and PLUG’s decline weren’t all that worrisome. They didn’t directly affect Plug Power’s operations.
Today’s news … was a bit more disconcerting.
The company said it would have to restate all financial statements for fiscal 2018, 2019 and some recent filings. Oof.
That’s not a good look when Wall Street is as nervous as a long-tailed cat in a room full of rocking chairs right now … especially when it comes to growth stocks like Plug Power.
If you want the company’s official statement on restating its financials, click here. If you’d rather hear what Plug Power’s statement would sound like as Nirvana lyrics … well, you came to the right financial e-zine:
What else should we be?
All apologies.
What else should we say?
To keep analysts away.
What else should we report?
Don’t wanna go to court.
What else should we be?
We’re rolling in money.
Hydro-gen. Hydrogen I feel as one. Hydrogen. Hydrogen.
Stock buried. Investors scurried. Yeah yeah yeah yeah….
PLUG shares certainly found their nest of salt today, plunging more than 16% at the open this morning and closing broadly lower. And why wouldn’t they? Everything’s their fault. They take all the blame.
On the bright side, Plug Power went on to say that the restatement wouldn’t impact its business deals, partnerships or cash position. Furthermore, it backed its gross billings outlook for $475 million in 2021, $750 million in 2022 and $1.7 billion in 2024.
But, I get it if you’re nervous, Great Ones. There’s no aqua seafoam shame in taking profits on PLUG right now.
If you got in when I first recommended PLUG back on October 23, 2020, you still sit on a 140% gain. That’s pretty good compared to the rest of the market.
That said, I’m not closing out the Great Stuff Picks PLUG position. We’re still really early in the hydrogen market movement, and few companies are as well connected as Plug Power in fuel cells and green hydrogen generation.
To steal a phrase from Banyan Hill expert Paul , I’m keeping “Strong Hands” when it comes to PLUG.
While I don’t blame you if Plug’s financial foibles prompt you to take the money and run — it’s your money, you do what’s best for you — I see this as a potential buying opportunity for any of you who don’t have exposure to the hydrogen power market.
Going: Strike Fast, Strike Hard!
It’s not all bad news today, Great Stuff Picks readers. Just look at CrowdStrike (Nasdaq: CRWD)!
The cybersecurity company posted strong fourth-quarter earnings that blew past the Street’s estimate by $0.05 per share. Revenue soared to $264.9 million, also topping the consensus estimate.
On the subscriber side, CrowdStrike added 1,480 new subs during the fourth quarter — an increase of 82% over the same quarter last year. Impressive … most impressive.
What’s more, the future’s so bright, CrowdStrike has to wear shades. Of course, it’d wear shades anyway … CrowdStrike is just that cool.
Remember that U.S. government cybersecurity breach back in December? Yeah. It was CrowdStrike that SolarWinds turned to for help. Too cool indeed.
Looking ahead, the company expects first-quarter revenue between $287.8 million and $292.1 million and full-year sales between $1.31 billion and $1.32 billion. Both ranges are well above Wall Street’s paltry targets.
It’s no wonder CRWD rallied more than 5.5% today. It should also come as no surprise that Great Stuff Picks readers who bought CRWD back in January 2020 are up more than 260% right now. Congratulations!
Those gains will only get bigger as cybersecurity becomes even more important. Keep holding!
Going: Home Is Where The Lumber Ain’t
Lennar (NYSE: LEN) has been quite the busy bee during the pandemic, building a bunch of very, very, very fine houses — 12,314 of them to be exact. Though, the number of cats in the yard is currently unknown.
Analysts in the middle of Wall Street expected the homebuilder to raise a total of 12,480 homes, but what Lennar lacked in deliveries, it made up for in cold hard cash — erm, earnings.
Per-share earnings came in at $2.04 to beat expectations for $1.71, and Lennar pointed to higher margin on its home sales for the big beat.
Higher margin is a surprise, to be sure, but a welcome one. Especially given that homebuilders are caught in a maelstrom of housing market headwinds and tailwinds right now.
Existing home supply is dwindling, and companies like Lennar can hardly build new homes fast enough to meet demand … whether that demand is coming from Millennials looking to buy their first home or anyone looking for a change of homebound scenery amid the pandemic.
Part of that holdup hiccup is a lumber shortage, driving up the prices of basic materials.
Back in November, when homebuilding confidence was at all-time highs, I noted a few looming lumber risks: “If demand outstrips supply, you’ll also see the cost of new homes rise significantly, which could temper the housing boom to an extent.”
Speak of the woodworking devil, huh?
Lennar’s putting up its best optimistic front about the “continued robust market conditions,” though methinks it’s only a matter of time before material costs, low interest rates and easy money lift home prices to unpalatable heights. I guess Obi-Wan was wrong — the high ground doesn’t always win.
Currently, the lumber shortage has added about $24,000 to the cost of a new home, according to industry experts.
As you might expect, not everyone agrees with my assessments of the housing market. What, you think I moonlight as a realtor? You say “Negative Nancy,” I say “Realistic Rick.” Lennar’s up 9% on its news, so some investors out there share the housing market confidence.
Now, how do you squeeze the last bit of hoorah oomph out of the housing market? Usually by scrounging Zillow like any good listing-lusting Millennial would … but you’re better off just asking Ted Bauman:
“I’m predicting that it will go even higher. We’re going to see the biggest boom in modern history. Investors who know what’s happening will have a chance to make five times the money — maybe even more — in the coming years.”
Gone: Turn The Page
On a long and lonesome highway, east of London town. You can listen to your Uber driver moaning out his lonesome song. You can think about investments or how cheap the ride was the night before.
But your thoughts will soon be wandering the way they always do. Your driver’s making $12.11 per hour, and there’s nothing you can do. You don’t feel like buying UBER, you just wish the trade was through.
You say: “Here I am … selling UBER again. There I am … paying a National Living Wage. Here I go … in this smelly car again.” Uber says: “We’re turning the page.”
So, yeah … Uber said it was “turning the page” on workers’ rights after it lost a critical labor law case in the U.K.
All 70,000 U.K. Uber drivers will now be guaranteed a minimum wage, holiday pay and pensions. That’s good for drivers, but not so much for Uber’s bottom line — especially since the company said that fares wouldn’t rise as a result. But then, we all saw how that bluff played out in California, so…
Still, there’s one upside for Uber: The ruling doesn’t apply to Uber Eats couriers, who’ll stay self-employed.
Remember, Uber Eats was the company’s most profitable and fastest-growing division through the pandemic. And while demand for delivery is sure to slacken a bit post-pandemic, many customers and businesses have come to rely on the service.
I know I like having more delivery options than just pizza and Chinese.
Anyway, investors are clearly unhappy with the potential can of worms this ruling opens up. Uber’s revenue is going to come under serious pressure if more governments follow the U.K.’s lead. As a result, UBER dropped more than 4% on the news.
In last week’s poll, we asked whether you stuck with the growth gang or joined the value-scouring bunch.
I won’t say I’m surprised by the 30.4% of you who saw the value investing light, but I underestimated that 69.6% of you would stick with growth. Mad men! (And not the Don Draper type). I love it, you absolute mad lads and lasses.
Now, about that whole growth stock thang…
If you skimmed straight through this email and missed my thoughts on PLUG above … what, you didn’t think you’d get called out?
We’re plugging back into the hydrogen hoopla for this week’s poll, so let me be 100% Swarovski-crystal-clear with y’all: Do what you think is right for your stake in PLUG.
If selling helps you sleep, sell. If you diamond-handed mad men (see above) are gearing to scoop up more PLUG on the cheap … I don’t blame you either. Just know that sucker’s staying in the Great Stuff Picks portfolio for the time being. I like the stock, etc.
But I do want to know your plans with the pick. Are you staying in PLUG until I recommend selling? Getting out on your own — pulling the PLUG? Doubling down on the dip? Click below and let me know:
Of course, some of you have other reasons to buy, sell or do whatever trading tomfoolery you do. We get it. Y’all are complex folks with refined stock-slinging taste. Wouldn’t it be great if there was some virtual inbox you could shout at to get your thoughts out?
Why, that’s GreatStuffToday@BanyanHill.com you’re looking for! And we’re looking for your thoughts on Plug Power, the current state of real estate, Uber’s give-and-take game with workers’ rights … and whatever else is floating ‘round your brain space today.
Send some greatness our way, and you may just find your email featured in tomorrow’s edition of Reader Feedback!
Until then, you can always check out Great Stuff on the web (click here) or follow us on social media: Facebook, Instagram and Twitter.
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Until next time, stay Great!
Joseph Hargett
Editor, Great Stuff