Is It A Bubble Yet?

Warning Signs Proliferate Again

One of the best illustrations that we are in an unmitigated and absolutely frantic financial bubble is the recent rally in fuel cell stocks. Yesterday, PLUG (Plug Power), a stock that traded at a mere 15 cents last year, finally fell sharply from its high above $11,70 (yes, it has risen by about 77 times in a few short months) after Citron Research remarked that nothing – absolutely nothing – has actually changed at the company.

According to Marketwatch:

“Plug Power shares traded at their highest in five years, and the stock was the second most active in U.S. markets in early trading Tuesday.

Then Andrew Left of Citron Research came out and said Plug Power PLUG -1.16% shares would be fairly valued at 50 cents. Shares of Plug were recently down 25%. “It’s a casino stock, “the lowest form of speculative moonshot,” Left said in a note Tuesday. There are no profits, no unique technology, and the end of government subsidies looms, he added.

Nothing has changed in the year since the stock traded at 15 cents. “Revenue for the 9 months ended September 30, 2013 was $18.6 (million), vs $20.2 (million) for the prior year. Nothing more needs to be said.”

The PLUG mini-bubble – click to enlarge.

Not only is this type of action highly reminiscent of the spring of 2000, it also turns out that the reason behind the moonshot is the fact that various companies are trying to avail themselves of federal subsidies by engaging in what are plainly uneconomic investments (if they were economic, they would not require subsidies):

“The contracts that have propelled Plug Power to stardom? Big companies such as Wal-Mart and FedEx are after the federal tax credits for renewable energy, Left said. That particular punchbowl, however, is likely to be taken away in a couple of years, he added.”

That particular punchbowl is indeed likely to be taken away.  For one thing, it is unaffordable and for another, global warming has stopped 17 years and 5 months ago (and counting). This is notwithstanding the fact that the political and bureaucratic elites continue to propagate the ‘climate change’ meme sotto voce at every opportunity.