Plug Power (NASDAQ:PLUG) stock has plummeted lower by about 45% so far this year, led by a $1 billion at-the-market (ATM) offering. The hydrogen fuel cell company noted that the proceeds would go toward “working capital, capital expenditures and general corporate purposes” as well as potential acquisitions or investments into complementary businesses.
This comes after the company warned in November that it would need to raise capital in order to stay afloat and also issued a going concern warning. These actions were attributed to a hydrogen shortage, which Plug Power believes is a transitory issue.
Still, shareholders will soon receive more news from the company, as Plug Power will provide an annual business update on Jan. 23 through a conference call. CEO Andy Marsh and Chief Financial Officer Paul Middleton will host the call and answer questions.
Does PLUG Stock Have Short Squeeze Potential?
With PLUG stock down so much, many investors are wondering whether the stock is setting up for a short squeeze. As of Dec. 31, there were a total of 161.50 million shares of PLUG sold short with a total value of $726.75 million. That’s equivalent to a short interest as a percentage of float of 29.9%, up from the previous reading of 29.4% on Dec. 15. The short interest would take 4.6 days to fully cover.
Generally, a short interest of 10% is considered high, while a short interest of 20% or higher is considered very high. At the same time, given the lag in short interest data and Plug’s significant decline since Dec. 31, it wouldn’t be surprising to see Plug’s current short interest below 29.9%. This could be due to short sellers taking gains by buying shares of Plug.
Another short interest indicator to track is the cost to borrow (CTB) fee. As of today, Plug has a CTB fee of 4.78%, which is still higher than the average CTB fee of between 0.3% and 3%. However, it isn’t exceptionally high.
It seems that PLUG is due for a bounce higher, whether that be due to a short squeeze or an oversold bounce. However, the risks that the company faces make it an unattractive long-term hold.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
