FuelCell Energy Inc (NASDAQ:FCEL)

FuelCell Energy Inc (NASDAQ:FCEL) Preferred Stock Pricing Rattles Investors

FuelCell Energy Inc (NASDAQ:FCEL)

FuelCell Energy Inc (NASDAQ:FCEL) slumped 3.75% after announcing the pricing of a $33.5 million convertible preferred stock transaction. Investors sent the stock lower even after the company announced a new 20 megawatt fuel cell project in South Korea.

FuelCell Stock Performance

The sell-off is already arousing concerns as to whether it will mark the end of a bullish run that began in May. FuelCell Energy Inc (NASDAQ:FCEL) is currently trading in a $1.45 – $1.63 trading range with a 52-week low of $0.80 a share.

FuelCell Energy Inc. (NASDAQ:FCEL) has struggled to rise above the $1.55 mark which acts as a key resistance level. The stock closing above the $1.63 could fuel a run to the $2.00 a share mark, which appears to be another resistance level.

FuelCell Energy Inc (NASDAQ:FCEL)
One month stock price chart for FCEL.

However, investor’s sentiments on the stock is waning after the pricing of the new stock offering. A point of concern is that the offering could plummet the company into more debt.

FuelCell Energy Inc (NASDAQ:FCEL) plans to offer 33,500 shares of convertible stock with a stated face value of $1,000 a share. The shares carry a 0.0% dividend and can be converted into common shares at $1.84 per common share. Each preferred share is being sold at $895.52 for gross proceeds of $30.0 million.

The company plans to use net proceeds from the offering for working capital purposes as well as financing of a number projects already underway. The offering should close on or about September 8, 2017.

20 Megawatt Fuel Cell Project

Part of the funds from the proposed offering are to be used to finance 20-megawatt fuel cell project that FuelCell Energy Inc (NASDAQ:FCEL) is working on, in conjunction with Korea Southern Power Company. Works on the project should begin before the end of the year with the facility poised to be fully operational next year.

The SureSource 3000 power plant is to produce clean electricity and thermal energy for use in district heating systems. Hanyang Industrial Development Company is to provide the engineering procurement and construction services for the project.

“This is the first fuel cell project for KOSPO and we are pleased that the value proposition of our SureSource solutions meets the exacting needs of KOSPO, one of Korea’s largest utilities. Our multi megawatt, scalable easy-to-site clean energy solutions are well-suited for utility-scale applications such as this project,” said FuelCell Energy Inc (NASDAQ:FCEL) CEO, Chip Bottone.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

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About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms