Plug Power (NASDAQ: PLUG) stock price has bounced back this year, making it one of the best-performing alternative energy companies. The shares were trading at $4.57 on Tuesday, about 106% above the lowest point this year.
Why PLUG shares jumpedThere are two main reasons why Plug Power stock price has surged in the past few weeks. First, the company secured about $1.6 billion from the US government, which is committed to grow its non-carbon energy business. This new fundraising means that the company will likely not need to dilute its shareholders this year.
As you recall, Plug Power is one of the most dilutive companies in Wall Street. Its total outstanding share count has jumped to over 600 million, up from 230 million in 2020. There was concern that the company would do another dilution this year after it published a going concern statement.
Still, there is a risk that the company’s cash burn will continue in the next few months, forcing it to raise additional cash in 2025. Besides, Plug Power invests millions of dollars in its projects, which are often delayed. It is therefore in a constant need for additional funds.
Plug Power stock price has also rallied after it published its financial results in January. The results confirmed that its Georgia plant was now operational after years of delays. It is now the biggest plant of its kind in North America and Europe. It also expects that its Tennesse plant will come online later this year.
The challenge is that the company has additional plants that is working on in places like Louisiana, New York, and Texas. It expects to spend about $150 million in this process. With the DoE cash, it means that the company will be able to fund its programs soon.
Still, not all analysts are excited about Plug Power stock. Those at Seaport downgraded the company citing a longer turnaround program. Similarly, those at BMO said that:
“It might be tempting to believe we are closer to the light at the end of the tunnel after a very tough run for PLUG shares after the call, but we exited with more concerns.”
Plug Power stock price forecast
In my last article on the PLUG stock price, I warned that shorting it was a highly risk situation because it had dropped sharply and had a high short interest. Recently, the stock has bounced back and formed what looks like an inverse head and shoulders pattern. It is now at the neckline of this pattern and is slightly above the 50-day and 25-day Exponential Moving Averages (EMA).
Therefore, while it is still risky, there is a likelihood that the PLUG share price will continue rising as buyers target the key point at $6. The stop-loss of this trade will be at $3.50.
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