In May, Michael Shlisky, an analyst with investment bank D.A. Davidson, listened to electric truck and bus manufacturer Proterra’s first-quarter earnings call and was impressed: Just a few months earlier, the Burlingame, Calif., company’s share price had been in free fall, plunging 79% in six weeks, in part because it had been burning through cash. But now, the company reported that it had $296 million in cash on hand at the end of March, virtually the same as in the prior quarter; company executives crowed that they expected 50% revenue growth for the year. “After a precipitous collapse, it looks to us like the storm surrounding [Proterra] is subsiding,” Shlisky told clients in a note. He maintained a buy rating on the stock, with a price target of $3.50 per share, more than double its $1.46 price at the time.
On Monday, Proterra broadsided investors with an announcement that it had filed for protection under bankruptcy laws to avoid running out of cash. Shlisky was among those who felt blindsided. “The outlook we had been talking about did not include bankruptcy whatsoever,” he told me. “It seemed pretty far from that after the first quarter.” Steven Fox, founder of Fox Advisors, told his clients in a note, “To us this news is stunning.”