Plug Power Hurtles Toward 4-Year Low After $1B Equity Offering Plans: Why This Analyst Says It's Unlikely To Woo Back Investors

Hydrogen and fuel-cell energy company Plug Power, Inc.‘s PLUG stock is set to open at its lowest level in over four years on Thursday.

What Happened: Plug Power, which slumped over 10% in the regular session on Wednesday, fell an additional 14.08% in after-hours trading. If the stock opens at the after-hours quote of $2.35, it remains on track to tumble to its lowest level since early October 2019.

In a prospectus filed with the SEC, the company said it has entered into an at-market issuance sales agreement with B. Riley Securities regarding the sale of up to $1 billion in stock. The sale will be made from time to time, with B. Riley acting as a sales agent.

Plug Power said it would retain broad discretion over the use of the net proceeds and that it currently intends to use them for working capital, capex, and general purposes. It also flagged the possibility of the net proceeds going to acquiring or investing in businesses, products, and technologies. Pending these uses, it would invest the net proceeds, primarily in government securities, and short-term, interest-bearing securities, it said.

The agreement has a cap such that the aggregate sale of shares cannot exceed $30 million per week.

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Why It’s Important: KeyBanc Capital Markets analyst Sangita Jain said she expects the announcement to pressure the stock further. The stock has been languishing, as the company faces multiple headwinds to its growth, she said.

“The announcement of a potential equity offering at this juncture, while necessary to remove the ‘going concern’ language from the annual 10-K filing, is unlikely to alleviate investor concerns,” Jain said. 

In the 10-Q filed with the SEC in early November, the company said it expects to generate operating losses for the foreseeable future due to investment needs and that its existing cash, and available-for-securities and equity securities will not be sufficient to fund operations through the next 12 months.

“These conditions and events raise substantial doubt about the company’s ability to continue as a going concern,” it said then.

What’s Next: Jain said Plug Power investors will now likely look ahead to an annual update call the company is hosting at 8:30 a.m. Tuesday. The company will likely shed details on the “decision to file for the equity shelf, the outlook for project financing and if the Department of Energy loan is still in the works,” the analyst said.

Plug Power will likely provide updated fourth-quarter revenue guidance and potentially its outlook for 2024 revenue as well as gross and operating margin, she added.

Jain maintained her below-consensus 2023 and 2024 revenue and adjusted EBITDA estimates for the company.

KeyBanc has a Sector Weight rating on Plug Power.

In premarket trading on Thursday, Plug Power shares plunged 15.91% to $2.30, according to Benzinga Pro data.

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