Why Plug Power Stock Is Losing Charge Premarket

Shares of hydrogen and fuel-cell energy company Plug Power, Inc. PLUG moved sharply lower in premarket trading on Tuesday.

The negative sentiment could be traced back to a downgrade of the company’s shares by Piper Sandler analyst Kashy Harrison.

The analyst downgraded the stock from Neutral to Underweight and also reduced the price target from $6.50 to $2.30, suggesting roughly 48% downside from current levels.

The downgraded opinion primarily based on liquidity risk, the analyst said, adding that the company burned $2.13 billion of unrestricted cash in the trailing-twelve-month period and currently has $567 million of unrestricted remaining on the balance sheet.

The analyst sees the company needing $1.7 billion in capital over the next 12 months. “We believe PLUG may be forced to pursue working capital financing and dilutive corporate financing to bolster liquidity,” he said.

“Further, we see the possibility that PLUG's going concern disclosures impact the company's ability to obtain DOE financing… and bankability of some of its products,” he added.

Wall Street’s sentiment toward the stock has soured ever since the company reported a double miss for the third quarter and flashed a “going concern” warning in early November.

Earlier this month, Morgan Stanley downgraded the stock to an Underweight and cut the price target from $3.50 to $3.

In premarket trading, the stock fell 4.25% to $4.06, according to Benzinga Pro data.

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