Green energy stock frenzy fizzles after short-seller’s report

March 12, 2014 by  
Filed under Green Energy News

Shares of ZBB Energy Corp. soared again on Wall Street Tuesday, rising as much as 75%, before the weeklong frenzy in green energy stocks fizzled after a report by short-seller Citron Research.

The wild ride in valuations for the Menomonee Falls clean-tech company, which has traded below $1 a share for months, came as investors seized on recent announcements by electric vehicle maker Tesla and Plug Power, a maker of fuel cells for forklifts.

Plug Power alone had hit its highest price in more than four years before short-seller Citron Research weighed in Tuesday with a report that described Plug as a “casino stock” and assessed Plug Power’s true value at 50 cents a share.

“We believe this entire space has entered a speculative frenzy,” Citron said.

According to a Reuters report, Citron said a casino stock ”can trade twice its outstanding shares in a single day, while turning over its entire float on people gambling that they can find a buyer at a higher price.”

After Citron’s report and an appearance on investing channel CNBC, shares of Plug Power fell 41% in heavy trading to close at $6.05. Investors also sold shares of other fuel cell companies — including Ballard Power Systems Inc. and Fuel Cell Energy Inc., Reuters reported.

Short sellers of stocks seek to profit from a company’s falling share price.

ZBB Energy closed up 20% Tuesday at $3.18, after touching $4.65 a share Tuesday morning. Even with Tuesday afternoon’s drop, the shares are still up 250% since March 3.

ZBB makes energy storage systems, zinc bromide batteries and power electronics for hybrid vehicles.

The flurry of interest in the stock comes as the company continues to work to regain compliance with the listing standards for publicly traded companies.

The New York Stock Exchange last week gave ZBB an extension, until the end of May, to comply with one of its standards.

That standard judges ZBB’s financial condition and whether the exchange believes the company will be able to continue operations based on its obligations.

ZBB has incurred substantial losses as it works to bring to market energy storage systems as well as next-generation versions of its zinc bromide batteries.

A recent agreement with the South Korean chemical firm Lotte gave the company assurances of more revenues this year and the company has said it’s in negotiation with other strategic partners as well.

As a result of ZBB’s recent work, the exchange approved ZBB’s compliance plan and gave it more time to comply with two other listing standards.

The wave of interest over the past week has pushed the market capitalization for the small company above $55 million.

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