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Plug Power Stock Up 26% In 5 Days - Fundamental Rally Or Short Squeeze?

Published 01/02/2024, 13:41
Updated 01/02/2024, 15:10
© Reuters. Plug Power Stock Up 26% In 5 Days - Fundamental Rally Or Short Squeeze?
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Benzinga - by Surbhi Jain, .

Plug Power Inc (NASDAQ:PLUG) stock has been treading south for most of the past year, with stock down over 74% during that period. Yet, over the past five days, the stock has gained more than 26%. Plug investors might view this sudden surge as potentially a dead cat bounce, rather than a definitive trend.

Short Squeeze Potential

So, what fueled the current rally in PLUG stock?

  • Roth MKM analyst Craig Irwin on Jan. 31 upgraded the stock from Neutral to Buy and raised the price target from $4.50 to $9, citing continued progress of the company's hydrogen plant in Georgia.
  • Plug Power stock's short interest is at 26.4%. Jan. 31 saw an extraordinary volume of short shares traded for PLUG stock.
  • The FINRA short sale volume traded on Jan. 31 was 32,273,509 – which sent the FINRA Short Volume (FINRA Short Volume / FINRA Total Volume) ratio to 55.44.
  • Jan. 23 saw high short volume trade at 40,289,130, corresponding to a short volume ratio of 65.42.
  • Jan. 18 recorded 19,471,946 in short volume trades.
The recent surge in short volume trades and the consequent bump in the stock indicates a potential short-squeeze being responsible for the stock’s surge.

Fundamentally Still Weak

Fundamentally, not much has changed with the company. The shares may have been boosted by the Q4 earnings, as CEO Andy Marsh announced that the company has concluded term sheet negotiations with the Department of Energy (DOE) for a $1.6 billion loan facility. The funding, however, is expected in the third-quarter.

Related: Plug Power’s Rocky Road As Hydrogen Dreams Face Financial And Regulatory Challenges

Bottom Line: The recent uptick in price could be considered a dead cat bounce, particularly as Plug Power’s liquidity shrank to around $140 million by Q4. With the company having access to a newly secured $1 billion ATM facility, there’s a possibility it might utilize this option in the near future, especially with the looming risk of notable dilution in the short term.

PLUG Price Action: Plug Power's stock closed 19.3% higher at $4.45 on Wednesday.

Read Next: Plug Power Stock Is Surging: What’s Going On?

Photo: Shutterstock

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Read the original article on Benzinga

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