Plug Power stock price analysis: brace for turbulence

By:
on May 20, 2024
Listen
  • Plug Power’s shares jumped sharply after receiving its conditional loan guarantee.
  • The company will now receive over $1.66 billion from the government.
  • It also signed an agreement with Allied Green Ammonia in Australia.

Follow Invezz on Telegram, Twitter, and Google News for instant updates >

Plug Power (NASDAQ: PLUG) stock price surged hard last week after the Department of Energy (DoE) approved a $1.66 loan guarantee to the company. It also soared after the company signed an agreement with Allied Green Ammonia for its electrolyser project.

Are you looking for signals & alerts from pro-traders? Sign-up to Invezz Signals™ for FREE. Takes 2 mins.

PLUG’s stock jumped to a high of $4.87 on Tuesday and then erased most of those gains and settled to a low of $3.25 on Friday. That retreat has dragged its market cap to over $2.4 billion.

Plug Power is making progress

Copy link to section

Plug Power, a leading company in the hydrogen industry, has made a lot of progress in the past few months. The icing on the cake was the decision by the DoE to approve a $1.6 billion loan guarantee as part of the Inflation Reduction Act (IRA). 

That fundraising confirmed the view that the government is committed to become a leading player in the hydrogen energy industry. It will also help the company continue growing its infrastructure after blowing billions of dollars in the past decade.

Plug Power has also commissioned its Georgia and Tennessee plants, which are producing about 25 tons-per-day (TPD). It is also working on its plant in Louisiana, which will be commissioned later this year. The plant will add another 15 tons of hydrogen to its daily production.

Recent data shows that the price of hydrogen in the US stood at about $4,830 per ton, meaning that the company will be making almost $200k per day. 

Additionally, Plug Power has paused its other projects in New York and Texas as it looks for more funding. In the past, the company has spent substantial sums of money and faced long delays in completing its projects.

Still, the challenge for Plug Power is how to scale its business profitably without needing additional capital. The most recent results showed that Plug Power’s revenue came in at $120.3 million while its gross margins narrowed.

It also reported a $295 million net loss, bringing its total loss in the past five months to over $1.6 billion. Looking at its balance sheet, its total cash and short-term investments dwindled from $1.6 billion in Q1’23 to $172 million in the last quarter.

Therefore, even though the company is slashing costs, there is a possibility that it will need to raise additional costs in 2026 and 2027. 

Plug Power stock price forecast

Copy link to section
Plug power stock

PLUG chart by TradingView

PLUG stock price bottomed at $2.22 this year, where it failed to move below in January and May. It then rebounded last week after the DoE decision on its loan guarantee. As it jumped, the stock moved above the descending trendline shown in black. 

It is also consolidating at the 50-day and 100-day Exponential Moving Averages (EMA). The stock has also moved below the second resistance point of the Woodie pivot point. 

Therefore, its outlook is still bearish, with the next point to watch being the pivot point at $2.60. This view will be invalidated if the stock jumps above the second resistance point at $3.85.

Energy & Power Stock Market Trading Ideas