EOSE - Plug Power: Conditional DOE Loan Guarantee Meets Meme Stock Frenzy - Hold
2024-05-15 08:11:24 ET
Summary
- On Tuesday, shares of Plug Power got a shot in the arm as the company finally managed to secure a much-touted conditional loan guarantee by the Department of Energy.
- Investors shouldn't get carried away by Tuesday's news, as the loan is not likely to be funded anytime soon.
- Last week, PLUG reported another set of disappointing quarterly results, with both the company's top and bottom lines missing consensus expectations by a wide margin.
- The company's service, fueling, and leasing segments showed improvement. In addition, cash usage was down significantly.
- Given market participants' increased risk appetite and considering the renewed meme stock frenzy, Plug Power should have no problem selling sufficient amounts of shares into the open market to finance its operations for at least the next couple of quarters. Consequently, I am reiterating my "Hold" rating on the shares.
Note:
I have covered Plug Power Inc. ( PLUG ) previously, so investors should view this as an update to my earlier articles on the company.
On Tuesday, shares of struggling fuel cell systems, electrolyzer solutions, and green hydrogen provider Plug Power Inc. or "Plug Power" got a shot in the arm as the company finally managed to secure a much-touted conditional loan guarantee by the Department of Energy ("DOE"):
Plug Power: Conditional DOE Loan Guarantee Meets Meme Stock Frenzy - HoldPlug Power Inc. (...) received a conditional commitment for an up to $1.66 billion loan guarantee from the Department of Energy's ("DOE") Loan Programs Office ("LPO") to finance the development, construction, and ownership of up to six green hydrogen production facilities .
The production facilities , which will be selected for financing in accordance with procedures to be set forth in definitive documentation with DOE, will be built across the nation and supply major companies, including Plug's existing customers, with low-carbon, made-in-America green hydrogen. The hydrogen generated will be used in applications in the material handling, transportation, and industrial sectors. (...)
While this conditional commitment represents a significant milestone and demonstrates the DOE's intent to finance the project, certain technical, legal, environmental and financial conditions, including negotiation of definitive financing documents, must be satisfied before funding of the loan guarantee.