Plug Power's stock jumps as much as 70% after long-awaited funding announcement
By Emily Bary
Plug Power announces a $1.66 billion conditional commitment for a loan guarantee with the Department of Energy
Plug Power Inc. delivered a long-awaited funding announcement on Tuesday morning that looked set to help fuel a major stock gain.
The alternative-energy company has received a $1.66 billion conditional commitment for a Department of Energy loan guarantee, the company said in a release.
The funding will enable Plug Power (PLUG) to enhance its network buildout. The company intends to use the money to finance as many as six green hydrogen production sites around the U.S.
Shares rose as much as 70% earlier in morning trading Tuesday but had pared losses and were recently up about 30%. Short interest is more than 30% of the float for Plug Power, and in light of the rally in meme stocks this week, some of Plug Power's Tuesday gains could relate to that trend.
"The loan guarantee will prove instrumental to grow and scale not only Plug's green hydrogen plant network, but the clean hydrogen industry in the United States," Chief Executive Andy Marsh said in a release.
Plug Power noted that while the Department of Energy commitment is a "milestone," there are still various conditions that have to be met before the loan guarantee can be officially funded.
"We believe lower cash burn and inventory drawdowns in 2024, combined with the disbursement of the DOE loan, will likely abate the majority of concerns associated with liquidity and scaling," Evercore ISI analyst James West wrote in a note to clients. He anticipates that the loan funds will start being distributed during the fourth quarter.
The company has been anticipating the Department of Energy arrangement for months, as it works on improving its cash management internally. For example, Plug Power noted in its last earnings release that its net cash used for operating activities and capital expenditures fell by 38% on a sequential basis during the first quarter.
"Inventory reduction remains a key priority in our cash management strategy for 2024," Plug Power said in its earnings release last week.
Through Monday's close, Plug Power shares were down about 61% on a 12-month basis. They're now off 49% over the course of the past year.
-Emily Bary
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05-14-24 1114ET
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