Why FuelCell Stock Popped 15% This Morning — Then Dropped

Hand holds out a fuel cell car utting out H2 bubbles as exhaust.

Shares of fuel cell pioneer and Plug Power rival FuelCell Energy (NASDAQ: FCEL) surged nearly 15% Monday morning after FuelCell announced a new partnership with ExxonMobil (NYSE: XOM) to test a new kind of fuel cell useful for carbon capture.

As of 12:30 p.m. ET, FuelCell had given back most of its gains but remains up 2.9%.

What are FuelCell Energy and Exxon up to?

FuelCell will partner with Exxon’s Amsterdam, Netherlands subsidiary to demonstrate the new technology, known as carbonate fuel cell (CFC). As for how it works, well, my high school chemistry is a little rusty, but in essence CFC appears to take in methane from natural gas or coal, combine it with water, and create heat, electricity, and (some, less) water as its output. Some carbon dioxide (CO2) is also emitted from the reaction, but part of the CO2 created is recycled to keep the reaction going, resulting in lower CO2 emissions than would otherwise result.

Thus, this particular hydrogen fuel cell technology can be summarized as a means of decreasing CO2 output while also producing heat and electricity.

Why didn’t FuelCell stock hold on to all of its gains?

That sounds like a good idea, but it raises the question: Is it not as good of an idea this afternoon as it sounded earlier this morning? Is that the reason FuelCell stock gave back so much of its early gains?

Well, the admission that CFC does still result in the creation of CO2 probably came as a bit of a letdown to investors who first heard of the technology today. A bigger concern, though, may be that FuelCell’s press release didn’t contain any specifics on the revenue value of the demonstration project, or any promise that it will turn FuelCell stock profitable.

After waiting 25 years for FuelCell to earn a profit (according to data from S&P Global Market Intelligence, FuelCell booked its last profitable year in 1997), investors may be getting a bit impatient. I can hardly blame them for that.

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