When Plug Energy (PLUG -12.43%) inventory plunged 64% in 2023, many believed it could not go any decrease. Few noticed what was coming: Shares of the hydrogen gasoline cell firm have now misplaced one other 46% in worth in 2024 to this point, thanks to an enormous drop in simply two days. Plug Energy inventory slumped by double-digits yesterday, and was down one other 14.6% as we speak as of 10:50 a.m. ET.
Concern and panic have gripped the market as Plug Energy prepares to offer an “annual enterprise replace” on Jan. 23. Its final quarterly earnings launch, in any case, was nothing in need of a catastrophe because it included a dire warning for traders. And as if the concern of what Plug Energy may announce subsequent week wasn’t sufficient, the corporate has simply introduced one other inventory sale.
The query is, what ought to traders in Plug Energy do now?
Plug Energy’s drawback is simply too massive to disregard
For a corporation that is but to show a revenue, its top-line progress principally decides whether or not the inventory is value investing in or not. Plug Energy’s income was rising steadily quarter after quarter till issues soured up just lately. In its final quarter, Plug Energy reported solely 5% year-over-year progress in income. What shocked the market, although, was its gross margin of unfavourable 69%.
The largest cause the market dumped Plug Energy inventory, although, was administration’s warning: It said that the corporate did not have sufficient money and fairness securities to fund its operations for the subsequent 12 months.
Briefly, Plug Energy may nicely be getting ready to collapsing and will not even survive if it can’t increase extra capital to run its operations and progress initiatives.
That explains the rationale behind the corporate’s newest inventory sale. On Jan. 17, Plug Energy introduced that it might promote shares of the corporate value $1 billion over the subsequent 18 months.
Will $1 billion over the subsequent yr and a half be sufficient for Plug Energy? I suppose not, as the corporate is deep in losses — as of Sept. 30, it had gathered a deficit of $3.8 billion and burned money quickly.
Purchase, promote, or maintain Plug Energy inventory?
With out mincing phrases, I might say Plug Energy inventory is one you’d wish to keep away from now. That is as a result of even when administration lays out a roadmap for Plug Energy’s revival subsequent week, you’d wish to wait till the corporate takes concrete steps to show its fortunes round and the identical begins reflecting in its numbers. Till then, all of Plug Energy’s bold plans to construct factories, develop capability considerably, and generate $20 billion in income by 2030 with a hefty gross margin of 35% will solely look good on paper.
Neha Chamaria has no place in any of the shares talked about. The Motley Idiot has no place in any of the shares talked about. The Motley Idiot has a disclosure coverage.
