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

Shares of Hyzon Motors Inc. were suffering a record plunge toward a record low Friday, after the maker of fuel cell-powered trucks disclosed a “myriad of issues,” including accounting regularities that will cause it to miss the filing deadline for second-quarter results.

That prompted a number of analysts to back away from their bullish stances, including J.P. Morgan analyst William Peterson who flipped to being the only bearish analyst on Wall Street.

The stock
HYZN,
-38.08%

plummeted 36.5% in very active afternoon trading Friday, putting it on track for the worst one-day performance since the ticker started trading a year ago. It was also headed for its lowest-ever close, below the previous record low of $2.94 on June 30, 2022.

Trading volume spiked up to 15.6 million shares, compared with the full-day average of about 1.8 million shares.

The stock was trading 65.5% below where it closed its first day of trading on the Nasdaq exchange on July 19, 2021, after the merger with special-purpose acquisition company (SPAC) Decarbonization Plus Acquisition Corp. closed.

Hyzon disclosed late Thursday in an 8-K filing with the Securities and Exchange Commission that it had begun an investigation into the timing of revenue recognition and internal accounting controls at its China operations. As a result, the company said it would not be able to file its audited 10-Q by the Aug. 15 deadline, which means it won’t be in compliance with the Nasdaq’s listing 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 company said in a statement.

Hyzon has also said its board’s audit committee has determined that its 10-K annual report for 2021 and its 10-Q for the first quarter of 2022 “should no longer be relied upon.”

That’s not all. Hyzon also said it identified “operational inefficiencies” at Hyzon Motors Europe B.V., which is its European joint venture with Holthausen Clean Technology Investments B.V. The company said the inefficiencies will have “a material adverse effect” on its ability to produce and sell vehicles.

The company said it now plans to restructure its European operations, and has retained a consulting firm to help reassess its global strategies and operations.

There’s more: The company said that back on May 5 it had entered into a stock purchase agreement with Holthausen to buy about 25% of the shares of the Hyzon Motors Europe JV, which would have given Hyzon a 75% stake in the JV. That deal was expected to close in July, but 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 stated. “The company and Holthausen are currently working to renegotiate the transaction.”

Hyzon said it didn’t know when, or even if, a new stock purchase agreement could be reached.

J.P. Morgan’s Peterson followed by double downgrading Hyzon, to underweight from overweight, and withdrawing his stock price target. His previous target was $6.

Given all the disclosures, Peterson wrote in a research note 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 also believes the Hyzon’s original “early mover advantage” in fuel cell electric vehicles (FCEVs) is now less likely given emerging competition, especially in overseas market in Europe and China.

Wedbush’s Dan Ives also downgraded Hyzon, to neutral from outperform, while slashing his stock price target 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 cut his rating to neutral from buy and his price target by two-thirds, to $4 from $12. He said the eventual outcome of the disclosed issues could be as simple as minor restatements and an improved European operation, or changes could be more 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% year to date, while the S&P 500 index
SPX,
-0.16%

has lost 13.2%.

Source: https://www.marketwatch.com/story/fuel-cell-powered-truck-maker-hyzons-stock-suffers-record-plunge-after-accounting-questions-raise-delisting-fears-11659724093?siteid=yhoof2&yptr=yahoo