While Plug Power (NASDAQ:PLUG) stock jumped 30% on Jan. 23 on hopes of it receiving a government loan, some analysts are telling investors to “pull the plug.”
BMO Capital cut its rating to “underperform,” predicting Plug Power will need new capital before it can get the $1.6 billion loan it’s seeking from the Department of Energy.
Plug Power opened this morning at $3.76 per share, a market capitalization of about $2.22 billion on estimated 2023 sales of $900 million. Over the last year, PLUG stock has fallen by 78%.
Hydrogen Is Hydrogen
BMO isn’t the only analyst group pulling the plug on Plug Power. As I wrote just the other day, the company’s plans for “green hydrogen” look doomed. Oil companies can create “blue” hydrogen from natural gas. “White hydrogen” exists in pockets underground.
More important, hydrogen is hydrogen. All sources are chemically identical.
But this may be a minority view. Tipranks shows 24 analysts following Plug Power, with only three now yelling “sell.” Yahoo Finance has 26, and none are predicting a profit any time soon.
The folks at Stocktwits remain high on the stock. One pointed to the BMO analyst’s recent track record. Others pointed out that analysts at T.D. Cowen and H.C. Wainwright have maintained buy ratings. There was also talk of a short squeeze, as almost 30% of the company’s stock still has short bets against it.
This doesn’t mean hydrogen is a dead business. I was high on Plug Power in 2020. It distributes hydrogen as well as producing it. The company’s fuel cells are popular in warehouses because water is their only pollutant.
But getting from ambition to completion is expensive, and competition is always just around the corner. Separating hydrogen and oxygen in water, as Plug Power is now doing in Georgia, is not the only solution.
PLUG Stock: What Happens Next?
Those who have been shorting Plug Power might want to cover, as their pockets are filled with profit. If Plug Power gets the Department of Energy loan it wants, the stock could move much higher. Overall, the stock remains a speculation.
As of this writing, Dana Blankenhorn 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.
