Why Is Plug Power Stock Going Parabolic Today?

Why Is Plug Power Stock Going Parabolic Today?

Plug Power (NASDAQ: PLUG) is on fire this morning, surging 15% as of 9:40 a.m. ET Thursday. The hydrogen stock has gained massive momentum recently and is now up a staggering 50% in just five days. A big analyst upgrade, the start of a key hydrogen plant, and Plug Power’s CEO expressing confidence in turning the company’s fortunes around — investors have found a lot to like about the beaten-down stock.

Plug Power’s CEO expects things to improve

A week after starting production at its new green hydrogen plant in Georgia, Plug Power said today it had completed the first fill of a cryogenic trailer with liquid hydrogen produced at the plant. The trailer, which holds enough hydrogen to fuel more than 3,200 forklifts a day, will be used at Plug Power’s customer sites, including Walmart, Amazon, and Home Depot.

With the capacity to produce 15 tons of liquid electrolytic hydrogen per day, the Georgia plant is Plug Power’s largest green hydrogen plant in operation right now. The plant currently operates eight 5 MW electrolyzers and the largest proton exchange membrane electrolyzer deployment in the U.S. CEO Andy Marsh called the first fill a “critical milestone for the green hydrogen economy.”

Meanwhile, in an interview with Barrons, Marsh said he is confident that Plug Power will emerge a stronger company by the end of the year. For those in the know, Plug Power is in a dire state right now, so much so that management even issued a “going concern” warning last quarter, stating that the company didn’t have sufficient cash and equity securities to run its operations for the next 12 months.

Where is Plug Power stock headed?

Marsh might be confident of turning Plug Power around over the next few quarters, but it’s too early to bet on it. Although the start of the Georgia plant means Plug Power can secure part of its hydrogen supply in-house instead of buying it from the open market and therefore cut costs, there’s still time for the plant to become fully operational. Above all, the company’s biggest problem right now is cash, and it needs money to run plants like Georgia.

Roth MKM analyst Craig Irwin upgraded Plug Power stock yesterday and doubled its price target to $9 a share after the start of the Georgia plant, but I’d contain my excitement until the company’s numbers start reflecting lower costs and better fuel margins. Meanwhile, Plug Power could also finalize a loan of $1.6 billion with the Department of Energy by the third quarter, but that’s again several months away, and a lot could go wrong at Plug Power in between. A going concern warning, after all, isn’t one you can easily overlook.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Home Depot, and Walmart. The Motley Fool has a disclosure policy.

Why Is Plug Power Stock Going Parabolic Today? was originally published by The Motley Fool