Plug Power’s Wild Ride: What’s Behind the Sudden Surge?
Tuesday morning saw Plug Power’s stock skyrocket by over 10%, reaching $3 per share before retreating to a modest 2% gain. But what triggered this sudden surge, and why did it fizzle out so quickly?
Morgan Stanley’s Prediction Sparks Optimism
A note from investment bank Morgan Stanley, released earlier today, predicted that Plug Power will receive a $1.7 billion loan from the Department of Energy by the end of this week. This news sparked optimism among investors, driving up the stock price. According to Morgan Stanley, the Biden administration is likely to approve this loan ahead of President Trump’s inauguration to minimize the risk of potential claw-back.
A Big Bump Ahead?
If Morgan Stanley’s prediction proves correct, Plug Power’s stock price is likely to receive a significant boost once the loan approval becomes official. However, this news alone may not be enough to justify buying into Plug Power stock just yet.
A Deeper Look Reveals Concerns
Despite the potential loan approval, Morgan Stanley reiterated its “underweight” rating on Plug stock, sticking to a $1.75-per-share target price. The reason? Even with the $1.7 billion loan, Plug Power’s financial struggles are far from over. The company burned through $1.8 billion in cash in 2023 and continued to hemorrhage cash in 2024, with a negative free cash flow of around $1.2 billion. With less than $100 million in cash remaining and over $900 million in debt, Morgan Stanley believes Plug Power will need to raise at least $500 million more in cash this year through the sale of new stock.
A Word of Caution
Before investing in Plug Power, it’s essential to consider the bigger picture. The company’s financial woes run deep, and even a significant loan may not be enough to turn things around. Instead, investors may want to explore other opportunities with more promising growth potential.
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