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February 14th, 2024 | 07:00 CET

Plug Power, Bayer, Defense Metals: Shares in panic mode

  • Mining
  • RareEarths
  • Hydrogen
  • Pharma
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Is everything not so bad at Plug Power, after all? In January, the hydrogen specialist triggered panic among investors with an announced capital increase. Now, the CEO is suddenly rowing back. So, should one buy the stock now? One analyst advises caution. Bayer shareholders are also in panic mode. The downward trend of the share simply cannot find a bottom. Even at this level, analysts are cautious. Defense Metals, on the other hand, is benefiting from panic - because this concerns the supply of rare earths. The dependence on China is enormous. Defense Metals aims to change this with its rare earth project in Canada. The Company CEO expressed confidence in an interview, stating that an important agreement has been reached with the local population, and important dates are on the horizon.

time to read: 4 minutes | Author: Fabian Lorenz
ISIN: PLUG POWER INC. DL-_01 | US72919P2020 , BAYER AG NA O.N. | DE000BAY0017 , DEFENSE METALS CORP. | CA2446331035

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    Defense Metals benefits from panic and gains important partner

    After the price jump at the end of 2023, the Defense Metals share is currently consolidating. CEO Craig Taylor points out that the share's potential is far from being fully realized. In an interview with kapitalerhö, he highlights the panic on the market for rare earths. China has practically built up a monopoly in this area. "Western governments have woken up and recognized the risks", says Taylor. However, new projects are scarce worldwide. The Canadian company Defense Metals is developing the Wicheeda project in British Columbia, a real gem in the sector. Defense Metals has therefore submitted funding applications to the Canadian government and the US Department of Defense. According to Taylor, three defense companies also intend to assist in developing the deposit. (Click here for the interview).

    Over the past six years, around 15 km of drilling has been carried out to develop and mitigate risks. The measured and indicated resource estimate is now over 34.3 million tons. **The Company expects to produce 25,0000 tons of rare earths annually, representing around 10% of global production. The lifespan of the mine is estimated at around 20 years. Shareholders can look forward to further exciting details in the second half of 2024, when the pre-feasibility study is scheduled to be published.

    Defense Metals recently brought McLeod Lake Indian Band (MLIB) on board as an important partner on the road to development. The MLIB is an association of local indigenous people. The MLIB has invested around 2.6 million shares in Defense Metals and is also to be involved in the development of Wicheeda. This applies in particular to decisions relating to technical, social and environmental aspects. A representative of MLIB said: *"The McLeod Lake Indian Band values the partnership with Defense Metals*, and together, we are setting new standards in joint project development, which is a true form of reconciliation. We are proud to be part of a project that will make an important contribution to the goals of the global energy transition and provide long-term economic benefits to our community for generations to come."

    Plug Power: Analyst warns after share price jump

    The Plug Power share is facing a different kind of panic. Last year, the Company hinted at impending capital measures. In January 2024, a possible capital increase with a volume of around USD 1 billion was then announced, signaling a massive dilution for existing shareholders. Accordingly, the share price slumped to around USD 2.40 in mid-January. To put this in perspective, at the start of 2021, the Plug share was trading at over USD 60. However, hopes for the prospects of hydrogen technology have not materialized as expected. Hype companies such as Nel and Plug Power are growing more slowly than expected and are unable to get their high losses under control. Plug Power's liquid assets have melted from USD 690 million to around USD 110 million in the first three quarters of 2023, yet the share price has almost doubled again in recent weeks. Why? A production plant was finally put into operation in the US state of Georgia. In addition, the prospect of state debt financing was announced. Most recently, Plug CEO Andy Marsh mentioned the possibility that the capital increase could be smaller than feared. However, shareholders should take this statement with caution. In the past year alone, the Company has had to reduce its forecasts several times. The Company's communication is far from reliable. The analysts at Seaport Research also have reservations about the recent jump in the share price, downgrading their rating from "Buy" to "Hold". While Plug Power is attempting to reduce its losses and raise new capital, the risk-reward ratio at the current price level is considered fair.

    Bayer shares not a buy despite price decline

    Despite the fall in the share price below the EUR 30 mark, analysts still only see Bayer shares as a hold. In the past week, three analysts published updates on the DAX-listed company. None of the experts were able to come up with a Buy recommendation. The analysts from Jefferies and JP Morgan refer to a report from the Bloomberg news service. According to the report, a court in the US state of Arizona has stopped the Environmental Protection Agency (EPA) from approving the pesticide dicamba for the time being. A permanent ban would noticeably impact Bayer's sales and earnings development.

    Deutsche Bank has reduced its price target for Bayer shares from EUR 45 to EUR 34. Overall, there are many uncertainties. An end to the legal disputes is not in sight. The strategic direction is also unclear. The analysts consider a split-up of the Company to be unlikely.

    All three shares will remain exciting in the current year. For Defense Metals, there are compelling reasons for rising prices. The battle for rare earths has only just begun. The partnership with indigenous communities reduces the risk of legal disputes. It is likely that the share price will rise even before the pre-feasibility study is published. A tragic example of the risk of litigation is Bayer. The Company simply cannot catch a break. Yet it urgently needs capital to drive forward its drug pipeline, for example. Plug Power will also be driven by wild speculation until the capital increase is completed. Even then, the path to profitability remains long and challenging.

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as shareholders, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") currently hold or hold shares or other financial instruments of the aforementioned companies and speculate on their price development. In this context, they intend to sell or acquire shares or other financial instruments of the companies (hereinafter each referred to as a "Transaction"). The Transactions may thereby influence the respective price of the shares or other financial instruments of the Company.

    In this respect, there is a concrete conflict of interest in the reporting on the companies.

    Apaton Finance GmbH reserves the right to enter into paid contractual relationships with the company or with third parties in the future with regard to reports about the company that are reported on the Apaton Finance GmbH website as well as in social media, on partner sites or in e-mail messages.
    The above information on conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications about companies.

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    Der Autor

    Fabian Lorenz

    For more than twenty years, the Cologne native has been intensively involved with the stock market, both professionally and privately. He is particularly passionate about national and international small and micro caps.

    About the author

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