What happened
Energy technology solutions company Generac Holdings (GNRC -3.77%) couldn’t muster much energy on the stock exchange on Hump Day. The company’s stock lost nearly 4% of its value on the day, after it announced a new investment.
So what
Before the market opened, Generac announced that it had obtained a minority stake in privately held Watt Fuel Corp, a company that develops and produces low-emission solid oxide fuel cell systems. Generac did not disclose the financial particulars of this arrangement; it also did not specify how large a stake in Watt it now owns. It did say that the deal closed on Nov. 23.
In its press release on the matter, it wrote that the two companies “plan to collaborate on the design and development of low-emission solutions supporting the resiliency needs of Generac’s customers.”
“The companies will combine Watt’s highly reliable, low-emission technology with Generac’s clean energy portfolio of products, which includes microinverters and battery storage system solutions,” it added.
Generac and Watt will become more closely linked going forward. Generac said that one of its executives would take a seat on Watt’s board of directors. It didn’t say when this would occur, and it did not identify the executive.
Now what
While this arrangement seems to be one with obvious synergies between peers, it leaves too many questions unanswered — and investors rarely like uncertainty.
What doesn’t help is that the market has largely been bearish on Generac lately, particularly after the company trimmed its revenue guidance in its third-quarter earnings report; earnings before interest, taxes, depreciation, and amortization (EBITDA) also look like they will come in well under expectations.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
