Shares of fuel-cell energy company Plug Power, Inc. PLUG have been languishing at depressed levels despite the promising potential the company’s business holds.
CNBC Mad Money host Jim Cramer‘s recent comments voiced the frustration some Plug Power investors might be experiencing.
What Happened: “I just can't be a fan of a stock that's losing, of a company that's losing that much money when the CEO told me they'd be making some money,” he said in CNBC’s Lightning Round which responds to callers’ stock questions.
In a post on X, formerly Twitter, Cramer said on Wednesday “Plug Power has so far not proven to be a great stock even if one day it might be a solution,” adding, “Please consider this..”
Why It’s Important: Plug Power went public in Oct. 1999 and the stock topped $1,500 the very next year but retraced much of its upward move over the next two years. The stock currently trades at a paltry $7 level.
Chart Courtesy of Benzinga
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The sorry state of the stock mirrors the fundamentals, which are still shaky amid execution issues and margin concerns. Morgan Stanley analyst Andrew Percoco said in a note released earlier this month Plug Power is a stock with a negative near-term risk-reward. The analyst has an Equal-Weight rating and $10 price target on Plug Power shares.
In August following the company’s second-quarter results, Percoco lamented the significant free cash flow burn due to a continued margin drag and working capital consumption.
“PLUG reiterated its 2023 revenue target range, but ongoing project delays may continue to serve as a near-term impediment to its path to profitability, which will likely result in external funding needs regardless of the DOE loan outcome,” he said.
Incidentally, the company is pinning hopes on a $1 billion in project financing through a U.S. Department of Energy loan program. CEO Andy Marsh said on the earnings call that the company is also in discussions with banks to secure additional financing. Funding needs at a time when interest rates are high could exert additional pressure on the company.
Plug Power is also contending with time overrun on some of its projects. The company pushed its New York and Texas hydrogen production timelines by roughly one to two quarters and its Georgia facility, which was to start producing liquid hydrogen, hasn’t commenced production yet.
Plug Power ended Wednesday’s session 5.31% higher at $7.54, according to Benzinga Pro data.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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