Plug Power (PLUG) stock price went parabolic on Monday, soaring by over 20% and reaching its highest level since July 18. It has now soared by over 55% from its lowest level this year as traders continued to focus on the US election.
Plug Power and the US election
Plug Power and other clean energy companies have done well in the past few weeks as investors watch out for the upcoming general election in the US.
This election could have big consequences for the industry as Donald Trump and Kamala Harris have different views of clean energy.
Harris has made the climate a major focus of her administration, while Trump is a big promoter of fossil fuels.
Therefore, Plug Power and companies like SunRun have done well as investors watch polls, which show that the election will be close.
Data by the New York Times shows that the two are virtually tied in most swing states, making the election hard to predict.
Another data by Polymarket shows that Harris is closing the gap in the prediction market. Therefore, the Plug Power stock price will likely continue rising, albeit briefly if she wins the election.
However, the reality is that companies are affected by more things than politics. For example, in theory, companies like Plug Power, SunPower, SunRun, and Enphase should be thriving under Biden, who introduced several friendly policies like the Inflation Reduction Act (IRA).
Plug Power even received funds from the government, helping it to avoid raising cash from investors or from debt.
The reality, however, is that most of these firms have dropped sharply under Biden, with Plug Power falling by over 96% from its highest point this year. Also, the iShares Global Clean Energy ETF (ICLN) has retreated by 58% from the 2021 highs.
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Tailwinds ahead
In addition to a potential Harris win, the Plug Power stock rose as investors focused on the rising energy demand in the US as companies like Microsoft and Amazon invest in data centers.
Some of these firms have already inked deals with independent power producers like Constellation, NuScale, and Oklo, that focus on nuclear energy.
On Monday, the FERC rejected a deal by Talen Energy to provide nuclear energy to Amazon to power its data centers.
Therefore, some analysts believe that hydrogen power will see robust demand from data center companies in the coming years. If this happens, Plug Power will be in a better position because of its strong market share in the industry.
The other notable Plug Power tailwind is that the Federal Reserve will likely continue cutting interest rates this week. Cash intensive companies like PLUG do well when the Fed slashes interest rates.
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Earnings ahead
The Plug Power stock price also jumped as investors focused on the upcoming third-quarter earnings, which will provide more color on its business progress.
The most recent results showed that its revenue dived sharply in the second quarter as the sale of equipment and related infrastructure waned. Its quarterly revenue fell from $260 million to $143 million as equipment sales plunged from $216 million to $76 million.
Plug Power’s half-year revenue dropped from $470 million to $263 million. Consequently, the half-year loss jumped to $558 million, while the quarterly figure was $262 million. The company blamed strategic investments and market dynamics. Notably, the firm said that its hydrogen margins in Georgia continued to improve.
Plug Power believes that its annual revenue will be between $825 million and $925 million this year, helped by its electrolyzer and cryogenic orders. The lower side of the estimate will be lower than the $880 million it made last year.
Data compiled by Yahoo Finance shows that analysts expect Yahoo Finance’s third-quarter revenues to be $211 million and its full-year figure to be $825 million. However, it is worth noting that Plug Power has a long record of missing analysts’ estimates.
The challenge for the company, however, is that the company is still burning cash and its balance sheet is not all that good. Its cash and equivalents fell to $62 million, down from $135 million from the same period last year. It ended the quarter with $222 million in restricted cash and $940 million in inventories.
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Plug Power stock price analysis
PLUG chart by TradingView
The daily chart shows that the PLUG share price has remained under pressure in the past few months. It bottomed at $1.61 in September and has rebounded to $2.51.
The stock has risen above the key point at $2.27, its lowest points in January and April last year.
Therefore, there are signs that the stock may have bottomed, meaning that it could surge to the 23.6% Fibonacci Retracement point at $4.40, which is about 74% above the current level.
The bullish view will be invalidated if the stock drops below the year-to-date low of $1.61.
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