EOSE - Plug Power: Sell The Rally On Poor Business Prospects And Likelihood Of Major Dilution

2024-01-23 22:02:09 ET

Summary

• Shares rallied 30% following important progress on a $1.6 billion loan facility with the Department of Energy. However, the loan is not likely to be funded anytime soon.
• Plug Power's first liquid green hydrogen plant in Georgia has finally commenced production, with another plant on track for a Q3 launch.
• Management expects to reduce cash burn by 70% this year due to a combination of capex reductions, working capital benefits, and margin improvements.
• Announced changes to the company's go-to-market approach will impact near-term revenue growth. In fact, I wouldn't be surprised to see the company experiencing a year-over-year sales decline.
• With liquidity down to just $140 million at the end of Q4, PLUG is likely to utilize its new $1 billion ATM facility sooner rather than later. Considering the poor business prospects and the high likelihood of major near-term dilution, I am reiterating my "Sell" 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. ...

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