The Plug Power stock price has crawled back after plunging to a low of $1.61 in September last year. It bounced back to a high of $3.30 this week, its highest level since July 26 of last year. Then, on Wednesday, it retreated to $2.67, a trend that may continue soon after big news from Toyota Motor. So, while the company faces risks, a 650% short squeeze cannot be ruled out.
Toyota gives up on hydrogen vehicles
Toyota is one of the top automakers, investing heavily in hydrogen vehicles in the past decade. It has launched several cars, as it predicted that hydrogen energy would be the future of clean energy.
However, a decade later, the company has struggled to make its hydrogen vehicles mainstream, mostly for obvious reasons. Hydrogen infrastructure is still unavailable in the US and other countries, and when available, it is more expensive than other energy sources.
Now, after selling just 27,000 cars in a decade, the company has decided to give up its bet on hydrogen vehicles for passengers. Instead, it has pivoted to hydrogen trucks that it believes will be a bigger industry. In a note to the FT, an analyst said:
“On all levels, hydrogen has been a failure for passenger cars. We still haven’t got an answer yet on commercial vehicle or stationary energy storage demand.”
Toyota is not the only company whose hydrogen bets have largely failed. For example, it is estimated that Hyundai lost about $22k for every unit of Nexo SUV made even after the government subsidised its vehicles heavily.
Meanwhile, in the United States, Shell has announced that it was shutting all its hydrogen fueling stations in California.
Implications for Plug Power
These developments will hurt Plug Power, a loss-making company that has invested heavily on hydrogen power in the United States.
Plug Power is involved in the end-to-end hydrogen energy ecosystem, which involves hydrogen production, storage, and delivery. It sells its hydrogen to companies across various industries like material handling, stationary power generators, and mobility.
Plug Power would have been the biggest beneficiary if hydrogen vehicles went more mainstream in the United States. As such, these new developments from Toyota and Hyundai means that hydrogen vehicles may not go mainstream in the next decade.
This development is happening at a time when the company’s business is not doing well. The most recent financial results showed that Plug Power’s net revenue fell from $198.7 million in Q3’23 to $173.7 million in Q3’24. Equipment sales fell to $107.1 million from $145 million, offset by an increase in other divisions.
Plug Power’s nine-month revenue retreated to $437 million from $669 million. On the positive side, the company narrowed its net loss from $283 million to $211 million. That is likely because the company slashed costs through layoffs last year.
Wall Street analysts expect the company’s revenue for the year will be $714 million, down by 19.8% from 2023. They then hope that its revenue will jump to $968 million in 2025, which would be a 35% from this year. Plug Power’s loss per share is expected to improve from $1.16 in 2024 to 60 cents in 2025.
Plug Power stock analysis
Plug Power shares have plunged from $75.37 in January 2021 to $2.67 today as it has increased the number of outstanding shares from 332 million to 880.45 million. These dilutions could be nearing the end as the Department of Energy provides it with a $1.6 billion conditional loan and its losses narrow.
The weekly chart shows that the PLUG stock price has moved sideways in the past few months, remaining between $1.61 and $3.31. This could be a sign that the stock is entering the accumulation phase.
In the Wyckoff Method, accumulation is usually followed by the markup phase, which is usually highly bullish for a company. This is notable because Plug Power has a short interest of 23.34%, which could see it have a short squeeze.
Therefore, while Plug Power faces substantial risks, the stock is likely to rebound later this year. If this happens, it will likely rebound to the key resistance point at $5. In the long term, it may rebound to the 23.6% retracement point at $20, up by 650% from the current level.
The post Plug Power stock: bad news from Toyota, but a 650% surge is likely appeared first on Invezz