Plug Power Inc

Plug Power Inc. (NASDAQ: PLUG) is a provider of hydrogen fuel cell turnkey solutions. The Company provide electrolysers that allow customers, such as refineries, producers of chemicals, steel, fertilizer, and commercial refuelling stations, to generate hydrogen on-site.

Recent Financial and Business Updates:

• Plug Achieves All-Time High Quarterly Revenue of USD 260.2M, Surging 72% YoY
• Reiterates the revenue guidance range of USD 1.2B - USD 1.4B for 2023. The remarkable growth in revenue reflects the mounting success of Plug's vertically integrated business model, robust expansion in material handling, and contributions from novel product lines.
• Sequential Margin Enhancement Indicates Promising Gains amid Scalability Efforts: Marginal improvements have occurred sequentially, showcasing substantial gains once adjustments were made for various factors tied to the expansion of new offerings. The scale-up of manufacturing, the establishment of green hydrogen infrastructure, and the implementation of the vertically integrated business strategy signify an inflection point in revenue and a clear path to profitability.
• Demonstrating the Power of Plug's Vertical Integration Strategy: The achievement of record revenue in Q2 is a testament to the potency of Plug's vertical integration strategy. The company's expansion with material handling pedestal customers and notable growth in the fields of cryogenics and liquefaction have been significant drivers of revenue growth. Forecasts anticipate a substantial increase in electrolyzer revenue in the latter half of 2023. This, coupled with a positive revenue outlook in cryogenic and application businesses including material handling, positions Plug well to achieve its annual revenue targets.
• Anticipating Substantial Margin Growth as Plug Expands into New Arenas: Although Plug reported a GAAP gross loss of (30%) during this period, there has been a sequential improvement. This improvement considers approximately USD 45M in costs primarily tied to scaling up various activities in the quarter. The rapid launch of multiple new offerings and the pace of scaling up sales and manufacturing for these endeavors represent an unprecedented stride in Plug's history. Despite these costs, the quarter highlights the robust margin growth that Plug is poised for as the company continues to advance these novel initiatives. Certain costs are linked to crucial investments that have paved the way for future growth and increased profitability, encompassing electrolyzer production optimization, expansion of the new Vista facility, and the introduction of new application products. Additional expenses were incurred due to unforeseen hydrogen plant maintenance and elevated hydrogen prices on the West Coast.
• Progress in Plug's Georgia Green Hydrogen Plant: Efforts continue to optimize and scale up Plug's Georgia green hydrogen plant. Final commissioning endeavors are underway to attain a production rate of 17.5 tons per day (TPD) during Q3 2023. This strategic move is expected to halve the fuel margin loss from Q2 to Q4 2023 as the Georgia plant achieves full production capacity.
• Bright Outlook for Electrolyzer Business: The outlook for Plug's electrolyzer business remains robust for both product and project-based initiatives. Recent accomplishments include the closure of a substantial electrolyzer deal with a prominent integrated energy operator in Europe, alongside ongoing progress in finalizing multiple other significant opportunities. The pipeline for electrolyzer sales is tracking over 7.5 GW, with final investment decisions (FID) anticipated within the next 12-18 months.
• Impressive Growth in Liquefier and Cryogenics Business: The sales from Plug's cryogenics and liquefier business experienced substantial growth, amounting to USD 69.7M in Q2 2023 compared to USD 18.2M in Q2 2022. The backlog, bookings outlook, and capacity expansion position this sector to contribute meaningful revenue and margin during the latter half of 2023. Plug's endeavors in the liquefier and cryogenic domain are targeting over USD 1.5B in booking opportunities in the medium term.
• Expanding Material Handling Business with New Customer Additions: Plug's material handling business has secured a new pedestal customer in North America, bringing the total count to 11 globally. Q2 witnessed the addition of 17 material handling sites, marking a substantial 70% YoY increase. The company is on track to establish over 80 new sites in 2023, representing an almost 100% growth in site expansion compared to the previous year.
• Diversified Demand and Market Expansion: Plug's first large-scale stationary unit has been successfully deployed, with orders spanning multiple end markets, including EV charging, prime power, and data center backup. Partnerships with entities such as Microsoft, Energy Vault, and pedestal customers are opening an addressable market exceeding USD 1 trillion.
• Gigafactory Exceeds Expectations: The company's gigafactory has exceeded its annual nameplate capacity for electrolyzers, producing over 100 MW of these units in May. Plans are underway to significantly expand the PEM stack manufacturing capacity in Rochester, with the goal of tripling the initial nameplate capacity. The Vista Fuel Cell Manufacturing Facility has achieved milestones in producing various units, contributing to the growth of Plug's product portfolio.
• Exploring Financial Opportunities for Future Growth: Plug is diligently exploring diverse financing options to support its projected growth. These options include engaging with counterparties for the DOE Loan Program, forging strategic project investment partnerships, and exploring corporate debt facilities.
  

Technical Observation (on the daily chart)

The price of PLUG stock has shown a consistent downward trend from 30^th August 2022, correcting around 73.02%. Currently, the stock is near an important support zone of USD 7.50-USD 8.20, from where price has taken support in the past. The RSI (14 period) momentum indicator is recovering from the oversold zone with a value of 34.40, with expectations of some consolidation or a short-term upside momentum. Moreover, the price is currently positioned below both the 21-day SMA and 50-day SMA trend-following indicators, which may act as dynamic short-term resistance levels.

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As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Speculative Buy’ rating has been given to Plug Power Inc. (NASDAQ: PLUG) at the current price of USD 8.37 as of August 28, 2023, 06:50 am PDT.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The Yellow colour line reflects the 21-period simple moving average (SMA) while the blue line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The orange colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The red and green colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps in easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is August 28, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

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