PureCycle Technologies, Inc. (PCT) Published: 2023-03-16

PureCycle Technologies, Inc. (PCT)

PureCycle Technologies, Inc. (PCT) is a publicly-traded company that specializes in the recycling of polypropylene, a widely used thermoplastic polymer. Founded in 2015, PCT uses a proprietary technology that removes color, odor, and contaminants from recycled polypropylene, producing high-quality plastic pellets that can be used in a variety of applications.

PCT's mission is to create a circular economy for plastic, where waste is minimized, and resources are conserved. The company's recycling process is both environmentally and economically sustainable, as it reduces the need for virgin plastic production and reduces plastic waste in landfills and oceans.

PCT's achievements:

PCT has achieved several milestones since its inception. In April 2021, the company went public through a merger with a special purpose acquisition company (SPAC) called Roth CH Acquisition I Co. The deal raised $414 million in gross proceeds, which PCT intends to use to fund the expansion of its recycling capacity.

PCT has also entered into several partnerships with leading companies in the plastic industry. In December 2020, PCT announced a collaboration with Nestle to produce food-grade recycled polypropylene, which will be used in packaging for Nestle's products. This partnership demonstrates PCT's commitment to producing high-quality recycled plastic that meets the stringent standards of the food industry.

In addition to Nestle, PCT has partnered with consumer goods companies such as L'Oreal and BMW to incorporate recycled polypropylene into their products. These partnerships not only provide PCT with a reliable customer base but also help to promote sustainable practices in the plastic industry.

PCT's setbacks:

While PCT has achieved significant success in its mission to create a circular economy for plastic, the company has faced some setbacks. In March 2021, PCT announced that it had discovered a material weakness in its financial reporting controls, which could lead to errors in its financial statements. This announcement led to a drop in the company's stock price.

It's kind of been downhill ever since.

PCT has also faced challenges in scaling its technology. While the company's recycling process has been successful in small-scale trials, scaling the process to commercial levels has proven difficult. PCT has experienced delays in the construction of its first recycling facility in Ohio, which was originally scheduled to open in 2020 but has been pushed back to 2022. These delays have slowed PCT's expansion plans and may limit the company's ability to meet customer demand.

And then there was this:

PureCycle: The Latest Zero-Revenue ESG SPAC Charade, Sponsored By The Worst Of Wall Street

Hindenburg's conclusion:
"Conclusion: Yet Another ESG SPAC Gone Wrong

Wall Street will exploit any loophole it can find.

We think PureCycle represents the worst qualities of the SPAC boom; it’s another quintessential example of how executives and SPAC sponsors will enrich themselves while hoisting unproven technology and ridiculous projections onto the public markets, leaving retail investors to face the consequences.

We commend the House Financial Services Committee for examining SPAC listings in its forthcoming May 24th hearing. We encourage a closer look at:

    Excessive cash and unrestricted stock compensation to management teams and SPAC sponsors, allowing them to regularly cash out hundreds of millions before ever even generating a revenue or executing on their plans. There should be ‘skin in the game’.
    Implementing “quiet period” rules in order to prevent deal sponsors from unduly influencing brand new listings, similar to rules for traditional IPOs."

Our Conclusion:

In conclusion, PureCycle Technologies, Inc. has made significant strides in promoting sustainable practices in the plastic industry. The company's proprietary technology and partnerships with leading companies demonstrate its commitment to creating a circular economy for plastic.

However, PCT has also faced challenges, including a material weakness in its financial reporting controls and delays in scaling its technology. As PCT continues to expand its recycling capacity and grow its customer base, it will need to address these challenges to maintain its position as a leader in the plastic recycling industry.

If you're willing to look past all the challenges (we're not), this company could be a decent trade at some point if you can get the timing just right.
But a long-term hold it is not.

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This article was written by: Anonymous
  • The author does not have a financial interest (stocks, options, other) in any companies mentioned in this article.
  • The author has indicated that this article is an original work. It expresses their opinions.
  • The author does not have a business relationship with companies mentioned in this article.

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