Bruised Plug Power stock price forms a falling wedge pattern

October 04, 2023 01:30 AM PDT | By Invezz

Bruised Plug Power stock price forms a falling wedge pattern — Image source: Invezz

Cash burn and interest rates

Plug Power and other clean energy companies like Sunrun, Enphase Energy, and NextEra have been in a strong bearish trend in the past few months. The same is true for companies in the electric vehicle companies like Rivian, Mullen Automotive, and Canoo.

The biggest reason for this sell-off is the ongoing high-interest rate environment. In its monetary policy meeting in September, the Fed decided to leave interest rates unchanged at 5.25%-5.50%. The dot plot pointed to at least one more hike this year.

High-interest rates have a negative impact on loss-making companies like Plug Power. As I recently wrote here, the Russell 2000 index has underperformed its bigger peers like the Dow Jones and S&P 500 because many of its components are not profitable.

Plug Power has been making losses for years. In its most recent quarter, the company’s net loss jumped to $208 million from $152 million in the same period in 2022. It has lost over $927 million in the past five quarters against revenues of over $1.02 billion.

Worse, Plug Power has delayed its projects timetable. It now expects its plants in Louisiana, New York, and Texas will achieve full production targets by 2024. The company had targeted to move into full production later this year. Therefore, analysts believe that these delays will stall the path to profitability.

There are also concerns that Plug Power will need to raise capital in either 2024 or 2025. Its cash and short-term investments have dropped from over $3.1 billion in Q2’22 to $1.08 billion in the last quarter.

Meanwhile, short-sellers are still boosting their stakes. The company has a short interest of 24.74%, making it one of the biggest in the industry.

Plug Power stock price forecast

PLUG chart by TradingView

I recently wrote that the PLUG share price had formed a falling wedge pattern on the weekly chart. This view still remains and the stock is slightly above the lower side of this wedge. This wedge is nearing the confluence level.

The Plug Power share price has moved below the 50-week and 100-week exponential moving averages (EMA). Further, the MACD has remained below the neutral point. Therefore, my contrarian view is that the stock could jump in the coming weeks. This rebound will likely happen on November 8th when the company publishes its results.

The post Bruised Plug Power stock price forms a falling wedge pattern appeared first on Invezz

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