Plug Power (PLUG) experienced a volatile trading session on January 14th, opening at $2.81 and reaching an intraday high of $3.00 before closing at $2.66, down 1.85% from the previous close of $2.71. The stock's early surge was driven by speculation surrounding a potential $1.7 billion Department of Energy (DOE) loan approval, as highlighted by Morgan Stanley's prediction that the loan could be confirmed by the end of the week. This anticipation initially pushed the stock up over 10% in early trading.
However, the excitement was tempered by Morgan Stanley's reiteration of an "underweight" rating, with a target price of $1.75, citing Plug Power's ongoing financial challenges, including a significant cash burn of $1.8 billion in 2023 and expected negative free cash flow of $1.2 billion in 2024. The firm also noted the company's precarious cash reserves and substantial debt, suggesting that even with the DOE loan, Plug Power might need to raise additional funds through stock sales.
Social media discussions, particularly on Reddit, reflected mixed sentiments. Some users expressed optimism about the DOE loan potentially boosting the stock, while others remained cautious, pointing out the company's financial struggles and the possibility of further dilution. A post on r/wallstreetbets noted, "Plug Power could ROCKET this week on DOE Loan confirmation," but also acknowledged the risks associated with the stock's volatility.
Despite the potential financial boost from the DOE loan, concerns over high operating losses and uncertainty regarding tax credit eligibility under the Inflation Reduction Act contributed to a cautious outlook. Analyst Andrew Percoco from Morgan Stanley maintained a Sell rating, emphasizing these challenges.