Plug Power stock went parabolic in premarket trading, as we anticipated in our earnings preview. PLUG jumped more than 14% to a high of $2.40, its highest level since July 9, and is now up about 30% from its monthly low. The sharp rebound raises an important question for investors: Is this the start of a sustained bull run, or just another short-term rally?
Plug Power stock jumps after earnings
Plug Power, a top player in the hydrogen energy industry, published encouraging results, even as its revenue dropped by 9%. Its revenue fell to $178 million, while its operating expenses dropped by 50% to $62 million. Its costs dropped as the company continued its cost discipline and its focus on asset monetization.
The substantial drop in its costs helped it to improve its profits, with the net loss moving from $228 million last year to $190 million.
Most of Plug Power’s revenue came from its sales of equipment, which made $88 million in the quarter. Its revenue dropped from $99 million in the same period last year.
The fuel delivered to customers rose to $39 million, while its power purchase agreements and services on fuel cell systems jumped to $26.9 million and $29.8 million, respectively. In a statement, the company’s CEO said:
“We continue to expand our installed material handling base, which also builds our recurring revenues through equipment replacements, service, and hydrogen fuel. Our electrolyzer pipeline continues to expand.”
READ MORE: Plug Power stock gets oversold as options market bets on rebound after earnings
Management boosted its forward guidance
Most importantly, the company boosted its forward estimate for the year, and now expects to generate a positive EBITDA this year. It now expects that its sales outlook for the year will be between 15% and 16%. The average estimate among analysts is that its revenue will jump to 15% to $817 million.
Another notable aspect is that the management plans to improve its balance sheet without diluting its shareholders. For example, it aims to unlock incremental proceeds for the $275 million target through its data center asset monetization initiatives.
Dilution has been one of the biggest challenges facing Plug Power investors. For example, its weighted outstanding shares rose to 1.39 billion from 1.126 billion in the same period last year.
Analysts have a mixed outlook for the PLUG stock price, with the average target being $3.5, up sharply from the current $2.1.
PLUG shares technical analysis
Plug Power stock chart | Source: TradingView
The daily chart shows that the Plug Power stock price has been in a strong downtrend this year, moving from a high of $4.3 in June to a low of $1.85 earlier this month. It ended the day at $2.1 on Monday and then surged to $2.4 in the premarket session, forming a fair value gap (FVG). The initial rebound was in line with our prediction.
This rebound happened after the stock formed a large double-bottom pattern, a common bullish reversal sign in technical analysis. It remains below the 50-day moving average.
These technicals suggest that the stock may continue rising as bulls target the psychological level of $3.
The risk, however, is that its initial surges after earnings tend to fade after a few days. For example, it jumped by 13% after the last earnings report and then extended these gains for a while, and then pared back these gains. The same happened after the other earnings report in May.
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