Hyzon Motors Craters After Financial Disclosures

Hyzon Motors is the latest electrification startup to crash after going public through a special-purpose acquisition company. The maker of hydrogen fuel cell systems for heavy trucks has revised its financial forecast, sending its shares down 38%.

Hyzon told the Securities and Exchange Commission late Thursday that it will not release its second quarter results as scheduled on August 15. And he said his financial reports for the first quarter and the year 2021 could no longer be relied on.

The American spin-off from Singapore Horizon Fuel Cell Technologies made most of its first commercial announcements for projects in Asia, Europe and Australia.

whale from a tale

Short seller Blue Orca Capital, in a 20 page report last September alleged that Hyzon’s biggest customer, Shanghai HongYun, was a “bogus company” formed days before announcing a deal to supply 500 fuel cell vehicles.

Hyzon has denied these allegations. But the SEC in January subpoenaed documents and information about the Blue Orca report.

In its SEC filing late Thursday, Hyzon said the company’s management “has become aware of revenue recognition timing issues in China.” A special committee appointed by the board of directors and outside advisers are investigating.

b of Hyzonthe board reassesses its strategy

Hyzon’s Board of Directors has retained the services of a third-party consulting firm to assist the Board and management in reassessing Hyzon’s global strategy and operations.

“We recognize the serious nature of this development and are working diligently … to resolve this issue as quickly as possible,” Hyzon said in a statement. “As a result of these findings, the company’s previously issued financial statements and guidance can no longer be relied upon.

“The delay in filing will have no immediate effect on the listing or trading of the Company’s common stock, although there can be no assurance that further delays in filing Form 10-Q will not impact listing or trading in the Company’s common stock of the Company’s common stock,” the statement said.

Craig Knight, CEO of Hyzon Motors (Photo: Alan Adler/FreightWaves)

Hyzon’s European issues

Hyzon also said it “has identified operational inefficiencies at Hyzon Motors Europe BV, the company’s European joint venture with Holthausen Clean Technology Investments BV. The company’s plan to purchase 25% of the joint venture’s shares – giving it 75% ownership – failed Hyzon said the deal may not go through.

The collective uncertainty about the future of Hyzon caused investors to dump Hyzon (NASDAQ: HYZN) shares on Friday. Trading volume reached 17.9 million shares, compared to a typical daily average of 2 million shares traded. Hyzon closed at a 52-week low of $2.78.

Analysts who follow the company have lowered their estimates.

JP Morgan analyst William Peterson downgraded the stock to underweight from overweight. He withdrew his share price target of $6 per share.

Peterson wrote in a research note that given the revelations, “investors are unlikely to give the company credit for having a solid fuel cell technology and hydrogen strategy that is underappreciated, at least for the next quarters.

Wedbush Securities analyst Dan Ives downgraded Hyzon from neutral to outperforming, reducing his share price target to $3 from $7.

“There are more questions than answers at this time with the myriad of issues identified in the filing that we fear will slow Hyzon’s growth story (which has been progressing well over the past six months) with this dark cloud now over history,” Ives wrote.

DA Davidson analyst Michael Shlisky lowered his buy rating to neutral and his price target to $4 from $12.

“We just don’t know where things will go at this point, and these types of investigations and restructuring actions can be costly and distracting,” Shlisky wrote. “We are moving to the sidelines until we have more clarity on these issues.”

Hyzon latest addition to list of struggling startups

Hyzon is just the latest ex-SPAC to run into trouble. Electric Last Mile Solutions, a maker of Class 1 battery-powered delivery vans based on components imported from China, filed for Chapter 7 bankruptcy in June. Lordstown Motors Corp., which plans to produce electric pickup trucks for commercial use, sold itself in May to Taiwan’s Foxconnon to survive.

Just last week, battery and hydrogen fuel cell truck start-up Nikola Corp. announced the purchase of all shares of struggling battery maker Romeo Power.

Startup Canoo Inc., which like Lordstown has filed for a going concern notice with the SEC, was granted at least a temporary reprieve in July when Walmart announced it would buy 4,500 of its class delivery vans. 1.

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