Plug Power stock price analysis: Worse than I expected

November 10, 2023 04:00 AM PST | By Invezz
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Plug Power (NASDAQ: PLUG) stock price is in a freefall after the company published weak financial results. The shares collapsed by over 30% in the pre-market session on Friday, reaching a record low of $4. In all, the shares have plunged by more than 78% from the highest point this year and by over 98% from its all-time high.

Challenges continue

Plug Power and other clean energy companies have been going through a major headwind this year as interest rates remained at an elevated level. In the United States, rates are now sitting at 5.50%, the highest point in more than two decades. In Europe, the European Central Bank (ECB) has pushed rates to the highest point on record.

The impact of all this has been slow growth in the clean energy sector. I have covered the challenges facing solar energy stocks like Enphase Energy, SunRun, and SolarEdge before. Similarly, wind firms like Orsted and Siemens Energy are going through majoe challenges.

The hydrogen industry is not doing well since this is a new energy source and is more expensive. This view was confirmed by the latest Plug Power earnings. In a statement, the company said that its revenue rose to over $198 million in the third quarter from $188 million in the same quarter in 2022. 

Its cost of revenue jumped to over $336 million while the operating loss soared to $273 million. The net loss surged to $283 million. Most importantly, the company warned that its business was being constrained by numerous external factors that had hurt its operations. The company’s CEO said:

“The unprecedented number of hydrogen facilities in the market running below nameplate capacity has caused significant hydrogen shortages impacting deployment schedules, fuel prices, system efficiencies, service on hydrogen infrastructures, and timing of varied reliability program rollouts.”

Therefore, the company is now focused on in-house hydrogen production, which is a highly expensive process. This is notable since its balance sheet is not doing well. Its cash and equivalents dropped to $110 million from $690 million in the same quarter in 2022. Its restricted cash rose slightly to $225 million.

All this means that the company will need to raise additional capital in the coming months since its losses are still rising.

Plug Power stock price forecast

Plug Power stock

PLUG chart by TradingView

In my last article on Plug Power, I wrote that the company had formed a rare bullish pattern and predicted that a bullish breakout was possible. I also warned that the company faced numerous risks and recommended staying in the sidelines.

These risks are now bigger than I expected, which explains why the stock has plunged hard. It has remained below all moving averages and also invalidated the falling wedge pattern. 

Therefore, the outlook for the stock is extremely bearish for now. This sell-off will happen as some of the current believes give up. If this happens, the next level to watch will be at $4 and below.

The post Plug Power stock price analysis: Worse than I expected appeared first on Invezz


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