Plug Power Stock Up 6% Today – Time to Buy PLUG Stock?

The price of Plug Power stock is surging nearly 6% this morning in pre-market stock trading action at $40.4 per share following a news-heavy month that included an arrangement to develop multiple green hydrogen facilities in Europe and a bold revenue forecast from the management team for 2025.

A fresh uptrend started for Plug Power stock back on 13 October when the company announced that it had signed agreements with Phillips 66 and Airbus for the development of hydrogen-powered energy solutions for their respective businesses.

Meanwhile, a day after, the company revealed that it had partnered with Renault to develop the technology that powered its Master Van H2-Tech prototype – a commercial van that is expected to be launched in 2022 featuring an expected autonomy of around 300 miles (500 kilometers).

This announcement came as part of Plug Power’s Symposium, an event on which the firm presented some of the most relevant latest developments concerning its business.

As part of this event, the management set forth ambitious targets for its financial performance including forecasted sales of $3 billion, gross margins of around 30%, and operating margins of 17% for 2025.

Can these positive news keep lifting the price of Plug Power stock in the future? In this article, I’ll be analyzing the price action and fundamentals of the company to possibly answer that question.

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Plug Power Stock – Technical Analysis

In a previous article about Plug Power stock, we highlighted that the price was undergoing a process of consolidation and that only a break above the $30.5 resistance area would confirm a bullish outlook for it.

This break occurred on 13 October on the back of the Phillips 66 and Airbus news during a session that saw PLUG stock rising nearly 13% while trading volumes multiplied by 4 times compared to the 10-day average back then.

Since then, the price has surged nearly 28.5% while today’s pre-market uptick is pushing that positive performance even higher.

The rally has gone as far as to push Plug Power stock above its 200-day moving average and that is a sign of mid-term strength that favors a sustained bullish outlook for this hydrogen stock.

That said, momentum oscillators are starting to overheat with the Relative Strength Index (RSI) tagging overbought levels for the second time in less than a month while the MACD has surged to its highest level since the January-March meme stock craze.

It is important to note that Plug Power stock currently displays an 11.5% short float with a total of 59.3 million shares being shorted according to data from Finviz. Even though this ratio is quite high, it may take short-sellers around 3 to 4 days to fully cover their positions based on the stock’s average trading volumes.

Meanwhile, there are no signs that this rally is being fueled by the retail crowd as the ticker is not being actively discussed in the popular Wall Street Bets Reddit forum.

Overall, the combination of a break above the 200-day moving average, the positive catalysts currently in play, and the stock’s elevated short interest reinforce a bullish outlook for PLUG stock. That said, a brief correction may take place in the following days before the rally resumes considering the overheated momentum readings cited above.

Plug Power Stock – Fundamental Analysis

Betting on the success of Plug Power from a fundamental standpoint involves believing in the management’s ability to deliver on its ambitious goals and bold promises. The company’s latest investor event called the Plug Power Symposium revealed the extent to which the senior management believes it can overturn years of disappointing performance.

Even though it does seem that positive momentum for hydrogen-powered energy-generation solutions is picking up, the extent to which that can lead to sales of $3 billion for the company in the next four years is questionable considering the company’s track record.

Most of the agreements the company signed recently (Phillips 66 and Airbus included) are just memorandums of understanding to explore possible ways in which Plug Power can collaborate with these firms. The money value of those agreements is still uncertain, if any.

With this in mind, even though the market seems to be quite excited about these latest developments, it remains to be seen if the management will be able to live up to its promises in the following years.

Considering this significant uncertainty surrounding the company’s outlook, the current valuation of $22 billion seems unjustified as it is resulting in 6 times the management’s forecasted sales of $3.5 billion for 2025.

A tough road lies ahead for the leadership team to achieve those goals and too much trust is being placed on their ability to execute.

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