PLUG Stock Price Down 4% – Time to Buy PLUG Stock?
The price of PLUG shares is down 4.4% today following yesterday’s post-earnings uptick with volumes already nearing the 10-day average in the first couple of hours of today’s stock trading session.
Revenues during this first quarter of the year came above analysts’ expectations amid a higher number of GenDrive units shipped to customers. However, the company reported losses per share of $0.12, far exceeding analysts’ estimates of $0.08 for the quarter.
Meanwhile, PLUG provided an update on the construction of its Georgia facility, a project that the firm expects to complete by the beginning of 2023.
Shares of the hydrogen fuel cell producer surged as much as 14% following the release of the report, with trading volumes more than doubling the 10-day average, possibly aided by a surge in comment volume on the popular Reddit messaging board WallStreetBets.
According to data from meme stock tracking website Swaggy Stocks, comments mentioning Plug accounted for 1.5% of the forum’s total posts. The percentage had been surging steadily ahead of the firm’s earnings release, moving from 0.3% to 1.5% today.
With short interest of 10.5% of PLUG’s float, could this stock be the next short-squeeze play eyed by the WSB army? Is the company’s technology promising enough to justify its current $16 billion market cap?
The following article takes a look at Plug Power’s fundamentals and the stock’s technical setup to attempt to answer those and other interesting questions about PLUG.
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Plug Power Stock – Fundamental Analysis
Plug Power’s sales came in 76% higher this past quarter compared to a year ago amid a higher number of GenDrive units sold while the firm’s profitability was battered by issues with a key hydrogen supplier and force majeure events such as the Texas freeze.
However, the firm reported a gross loss once again. Interestingly, the restatement of the company’s financial performance resulted in gross losses of $438 million during the fourth quarter of 2020, a number that essentially wiped all of the company’s sales going from 2017 to 2019.
The company attributed this huge loss to an extraordinary non-cash charge resulting from the vesting of a customer’s warrants. The management stated that this adjustment should facilitate the interpretation of its financial statements moving forward.
Profitability is not the strong suit of PLUG as the company has been reporting net losses every single year. Last year, PLUG’s negative income reached $600 million amid the adjustment mentioned above while the year before that losses amounted to $84 million.
Meanwhile, the firm’s long-term debt is negligible since it only represents a tiny portion of the company’s huge $4.35 billion cash reserve as reported yesterday. It is important to note that PLUG’s cash accounted for 75% of the company’s balance sheet and a quarter of its market capitalization.
Aside from this cash reserve, Plug Power doesn’t have much to show for or at least nothing that justifies the remaining 75% of the company’s market capitalization, a figure that stands at $12.33 billion at the moment.
In the past nine years at least, all the company has shown is an erratic revenue, earning, and cash flow generation capacity and no improvement in its growth prospects or in the rate at which industries are adopting hydrogen-powered energy sources.
In my view, the company’s past performance and prospects do not justify its frothy valuation and that could result in further downward momentum for the stock leaving out any short-term swings caused by the influence of WSB traders on the price action.
Plug Power Stock – Technical Analysis
The price of Plug Power has nearly halved since the stock reached an all-time high of $75.5 per share in late January this year after the company reported that it will be restating some of its previous financial reports amid changes in the way it accounted for some of its expenditures and revenues.
In this latest quarterly report, the management team informed that the company had finished this procedure, which resulted in no material changes to the firm’s financial performance or operations.
This statement could possibly dissipate doubts about the accuracy of the firm’s financial reporting and that could free up some retained buying interest.
For now, as long as the price holds above the $30 support area highlighted in the chart, chances are that PLUG should continue to surge steadily toward the $40 level for a potential 21% upside.
However, a break below that threshold might be signaling upcoming weakness in the price action and that could result in a sharp correction, with a sell-off possibly targeting the low 20s.