By Plug Power stock price has been in a strong freefall in the past few months, moving from a high of $4.57 in October to the current $1.98. Its market cap has dropped from the year-to-date high of $4.9 billion to the current $2.76 billion.
Why PLUG stock has crashed
Plug Power stock price has been in a strong freefall in the past few months, erasing most of the gains made earlier this year. This decline happened as concerns about the company’s dilution continued.
In a statement last week, the company announced that it raised $375 million of its 6.75% convertible notes due in 2033. In total, the company received about $399 million, which it will use to retire it remaining high-cost 15% debt, refinance its 2026 convertible notes, and eliminate it first lien loan.
This refinancing is a good thing as it will help it reduce its debt and its interest expenses. In a statement, the CEO said:
“With $399 million in new cash, the removal of the first lien, and reduced interest costs, Plug now has one of the strongest balance sheets in years. We are well-positioned to support sales growth in both material handling and electrolyzers as customer demand accelerates.”
Plug Power has been one of the most dilutive companies in the United States as its outstanding shares have jumped. Data shows that the number of outstanding shares jumped to 1.20 billion, up from 576 million in 2022.
Soaring outstanding shares normally dilute existing investors by reducing their stake in the company. It also reduces their earnings-per-share over time.
Slow growth is continuing
The Plug Power stock price has come under pressure as investors remain concerned about its slow growth. Its recent result showed that revenue rose to $177 million in the third quarter from $173 million in the same period last year.
This revenue growth was mostly driven by hydrogen supplies to consumers, whose revenue rose from $25 million to $35 million. Also, its services on fuel systems had an encouraging performance as its revenue rose to $19.7 million from the previous $14.14 million.
At the same time, the company’s sales of its equipment dropped from $107 million to $96 million. This slowdown is notable because it is its biggest business.
Plug Power stock has also dived because of its substantial losses. Its net loss jumped to $363 million in the last quarter, a big increase from the $211 million last year. Worse, the company’s path to profitability remains long, meaning that further dilution is a big risk.
Plug Power stock price technical analysis
PLUG stock chart | Source: TradingView
The daily timeframe chart shows that the PLUG stock has crashed from the year-to-date high of $4.57 in October to the current $1.98. It recently crashed below the important support level at $1.98, its highest point in July this year.
The stock has moved below the 50-day and 100-day Exponential Moving Averages (EMA) and the strong, pivot, reverse point of the Murrey Math Lines tool.
Plug Power’s Relative Strength Index (RSI) and the PPO have all continued falling. Therefore, the most likely scenario is where the stock drops to the ultimate support at $1.56 and then starts to rebound as investors buy the dip. Such a rebound will have the stock retest the Major S/R pivot point at $3.13.
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