Plug Power Stock Reacts to Loan Approval News

Plug Power shares experienced a volatile trading session, initially jumping over 10% on news of a potential $1.7 billion loan approval from the Department of Energy but ultimately stabilizing with just a 2% gain. Investors are advised to approach this stock with caution.

Date: 14-01-2025

AI Rating: 4

Stock Performance Analysis

Plug Power's stock exhibited significant volatility, surging initially over 10% before retreating to a more modest gain of 2%. This reaction indicates a strong market interest and speculative trading following optimistic news regarding a potential loan approval.

Loan Approval and Analyst Predictions

Morgan Stanley forecasts that Plug Power will likely receive a $1.7 billion loan from the Department of Energy soon, potentially boosting the stock price further. However, the bank maintains an ‘underweight’ rating on the stock, suggesting that even with this financial assistance, Plug Power's issues are far from resolved.

Cash Flow Concerns

A notable concern is Plug Power’s financial health. The company reportedly burned through $1.8 billion in cash in 2023 and is expected to have negative free cash flow of approximately $1.2 billion for 2024. With less than $100 million in cash left and over $900 million in debt, the company faces daunting challenges ahead.

Investment Outlook

Despite the potential loan approval being a positive signal for liquidity, Morgan Stanley's conclusion that Plug Power will still need to raise at least $500 million through stock issuance underpins a bearish outlook for investors. They emphasize caution and suggest that acquiring more shares may not be a wise decision at this point.

Stocks: PLUG