Plug Power stock just suffered a harsh reversal: buy the dip or sell the rip?

Plug Power stock has slumped sharply in the past few days, moving from a high of $4.33 on June 2nd to the current $2.91. It has slumped to its lowest point since April 20th, with the market capitalization falling from over $5.7 billion to $4 billion today. So, will this hydrogen giant rebound or fall further?

Plug Power stock price technical analysis

The daily chart shows that the PLUG share price has crashed in the past few days, erasing billions of dollars in value. It has also pared back some of the gains made in May, which was its best month in years. 

Still, on the positive side, the stock has remained above the 100-day Exponential Moving Average (EMA). That is a sign that bulls remain in control for now. 

Another positive side is a sign that the stock is now in the handle section of the cup-and-handle pattern. C&H is one of the most common bullish continuation sign in technical analysis. 

The upper side of this pattern is at $4.56, while the lower side is at $2.65. This cup has a depth of about 63%. Therefore, the most likely scenario is where it rebounds in the coming months. If this happens, the next key level to watch will be the May high of $4.33. A move above that level will point to more gains, potentially to $4.57, followed by $5. 

PLUG stock price chart | Source: TradingView

Plug Power’s business is doing well as it targets profitability

The most recent financial results showed that Plug Power’s business is doing well as the management targets profitability. It expects to have a positive EBITDA run rate in 2026, followed by an operating profit in 2027. Its full-year profitability is expected to happen in 2028. 

These are all ambitious targets for a company that has been a perennial loss-maker over time. The most recent numbers showed that its gross loss improved to $21.6 million from $73.8 million in the same period last year. 

The promised profitability is happening at a time when its revenue growth is continuing, helped by the rising demand from companies like Amazon and Walmart. 

Its quarterly revenue jumped to $163 million in the first quarter from $133 million in the same period last year. Analysts expect that its revenue will continue doing well in the coming years. For example, the average estimate is that its revenue will jump by 14% YoY to $813 million this year, followed by $964 million next year.

Still, the company faces major challenges as it works towards profitability: perennial cash burn. It has burned billions of dollars in the past few years, and this trend will continue in the near term. 

Analysts expect that its loss per share will be 29 cents this year and 16 cents next year. Also, the company faces the challenge of consistency, which explains why its short interest remains at 25%. That is a sign that investors believe that the stock may fall further.