Plug Power’s (PLUG), stock price soared on Thursday, despite a warning from a prominent short-seller that the company could go bankrupt. PLUG’s share price is $2.50. This is up 50% from the lowest point of this year. It is still down almost 100% since its high.
The balance sheet problems persist
Plug Power, an American company, aims to be the largest player in the hydrogen industry. The company offers hydrogen fuel cells as well as proton exchange membranes, hydrogen liquefiers and liquid cryogenic hydrogen solutions. The company’s main business is the production of hydrogen.
Plug Power hopes that its Georgia and Louisiana locations will help it become the largest hydrogen producer in the United States. This hydrogen is sold to the transport industry, heavy industry, retail and logistics.
Plug Power aims to become the leader of the hydrogen energy industry for vehicles. Analysts expect this sector to continue growing over the next few decades.
However, the industry’s capital intensive nature is the main reason why it has consumed billions in the last few years.
The net loss for the last twelve months was over $1.4 billion. This is a significant increase from $1.38 billion the previous year. In the last five year, it has lost over $3.6 billion.
Now, the company relies on a loan from the Department of Energy to fund its financial position. Analysts at Hunterbrook Capital recently warned that $1.7 billion in cash might not arrive, especially since Donald Trump will be the next president.
Plug Power’s most recent results revealed that its balance sheet was not in the best of shape. The company ended the quarter with $93 in cash and other equivalents. This is down from $135 in December of last year. Cash restricted by the company was $216 million while inventory stood at $885 million.
The company is hoping to receive DoE funding as soon as it can, as its losses remain enormous.
Recent results revealed that the company’s net loss for this quarter was $211 Million. The company’s net loss for nine months of this year was $769 million. If this trend continues or even if the company makes marginal improvements, as promised by management, it is likely that they will need more cash.
Plug Power is known for its long history of raising money and diluting shareholders. Its total number of outstanding shares has risen from 306 millions in 2020 to nearly 1 billion today. This trend will continue. Recently, it raised $200 million through the sale of shares.
PLUG also ranks as one of the top shorted US energy companies. The company has a short-interest of 23%. This means that many investors are shorting the company.
Plug Power Stock Price Analysis
The daily chart shows the PLUG stock price in a narrow range over the last few weeks. It is still slightly above its key support of $1.56, which was its lowest point since September.
Plug Power is now at $2.4, the highest since November 5. The Average True Range (ATR), a measure of volatility, has also continued to fall.
PLUG continues to consolidate between the 50-day and100-day Exponential moving averages (EMA).
As a result, odds are against Plug Power as its prices continue to rise. There is a possibility that the stock will experience a short squeeze within the next few month. If this occurs, the stock price could rise to $4 by 2025.
Read more: Plug Power is a risky stock, but a squeeze cannot be ruled out.
This post is Is Plug Power stock a contrarian investment? This post may be updated as new information becomes available
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