Plug Power (NASDAQ: PLUG) stock rocketed greater than 10% in early trading Tuesday, hitting $3 per share before giving back most of its gains and retreating to a single-digit gain. As of 10:20 a.m. ET, Plug stock remains to be up, but only by 2%.
So why did Plug Power go up in the primary place, and why did it surrender its gains so quickly?
In a note out this morning, investment bank Morgan Stanley predicted Plug Power will receive Department of Energy approval for a $1.7 billion loan by the top of this week, as StreetInsider.com just reported. Because the analyst explained, the Biden administration is prone to approve this loan ahead of President Trump’s inauguration to “reduce the chance of potential claw-back of this loan.”
Assuming Morgan Stanley is correct about that, Plug Power is about to get a giant bump in its stock price once the loan approval becomes official.
So you need to buy Plug Power stock, right? Well, not so fast.
The loan approval will likely be excellent news if it happens, little doubt. But Morgan Stanley still doesn’t think the stock is a “buy,” and in reality reiterated its “underweight” rating (i.e., “sell”) on Plug stock, and stuck with a $1.75-per-share goal price on the shares.
And why did MS do that? Because in line with the banker, even $1.7 billion in government money won’t be enough to save lots of Plug Power. Do not forget that the corporate burned through $1.8 billion in money in 2023. It continued burning money through 2024 — about $892 million in the primary three quarters, implying about $1.2 billion in negative free money flow for all of 2024.
With lower than $100 million in money remaining, and well over $900 million in debt already collected, Morgan Stanley thinks Plug Power could have to boost at the very least $500 million more in money this 12 months, through sale of latest stock.
Loan or no loan, Plug Power stock stays a sell.
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