Plug Power stock gets oversold as options market bets on rebound after earnings

Plug Power stock remains in a deep bear market after falling by over 50% from the highest point this year. This retreat will be put to the test on August 7 after the company publishes its financial results. So, will the stock rise or drop after its earnings report?

Options market suggests high volatility after earnings

Plug Power stock normally experiences substantial volatility whenever it publishes its financial results. For example, it jumped by 13% when it released its numbers in April and 30% after its numbers in March.

The options market is positioning itself for high volatility after the earnings release, with the implied volatility for those expiring on August 7 being at 107%. This puts it in the top 25% in terms of volatility.

Barchart data shows that its total put volume stands at 956, while the call volume is at 973. This gives it a put/call volume ratio at 0.98. In terms of open interest, the put and call open interest soared to 1,071 and 7,457, respectively. It has a put/call open interest ratio of 0.14, which is a highly bullish sign as it means that investors are buying more calls than puts.

Analysts predict Plug Power revenue growth

One potential reason behind the bullish positioning is that analysts predict the company will continue growing, helped by its large deals with Amazon and Walmart.

The average estimate among analysts is that its revenue will come in at $170 million, with one analyst seeing it rising to $173 million. 

Notably, the loss per share is expected to improve from 18 cents to 8 cents, a sign that the company is making progress in its profitability ambitions. Plug Power expects that it will turn a net profit in the next few years.

For the year, analysts expect the company to make $813 million, up by 15% YoY, followed by $$962 million next year. There is a likelihood that the company will cross the $1 billion annual revenue mark as soon as next year.

The most recent results showed that Plug Power’s business did well, with its revenue rising by 22% to $163 million. Its gross margin improved to minus 13% from minus 55% in the same period last year. 

Plug Power stock price technical analysis

PLUG stock chart | Source: TradingView

The daily chart shows that the PLUG stock has been in a strong bearish trend, falling from $4.32 in May to the current $2.09. It is slowly approaching the extreme oversold level of the Murrey Math Lines tool.

At the same time, the Relative Strength Index (RSI) is nearing the oversold level of 30. It has been falling since peaking at 73 earlier this year.

Therefore, there is a likelihood that the stock will rebound, potentially to the ultimate support level of $2.35. This rebound is possible as the company is highly shorted, with the short interest rising to 24%.