Inez Meraz 
- Plug Power shares gained over 10% following Q3 earnings.
- Earnings and revenue missed estimates.
- Q3’s free cash flow was about negative $300M.
Plug Power Inc. saw its shares gain over 10% after the firm announced its Q3 outcomes last Tuesday. The stock trades under the NASDAQ: PLUG ticker.
Earnings & Revenue Missed Estimates
Plug Power Inc. builds hydrogen fuel cells that replace traditional batteries in electric-powered vehicles and equipment. The American company announced its Q3 outcomes last week. Meanwhile, its revenue noted a 31.1% year-over-year increase to $188.6 million. Also, it saw a -$0.30 GAAP loss/share.
Though earnings and revenue missed estimates, the new electrolyzer business saw its gross margins hitting beyond 15%. The firm’s management anticipated revenue of about $1.4B for FY 23, indicating significant growth for the company.
The Russia-Ukraine war saw governments thinking about renewable energy to avoid overreliance on imported fuel. Plug Power promises to develop more than 500 tons of clean hydrogen/per day come 2025. Plug Power Chief Executive Officer Andrew March stated that pure hydrogen would help the business double in the coming years.
The CEO added that Plug Power would reduce the costs of industrial gas. Plug Power remained the leader as far as energy transition is concerned. Nevertheless, investors should stay on the fence until the firm starts attaining its aggressive goals.
The firm stares at its current execution problems, whereas management stays notorious for over-promising and under-delivering. For instance, the CEO predicted $140M in electrolyzer shipments for Q2 2022.
In the third quarter investor letter, Marsh highlighted that the company targets 60 – 100 MW electrolyzer stacks in the fourth quarter. That represents a portion of the projected $140 million only 90 days ago.
The fundamentals front shows a negative free Q3 cash flow was about $300 million. The company isn’t profitable. Moreover, Plug power does not pay dividends, and the $7.2 book value/share means you can access other lucrative investment opportunities for now.
Technical Analysis
PLUG shares have revived from the lows hit in November’s initial week, and bulls dominate the price action. Meanwhile, the price moved beyond the 10d MA – a positive signal. However, market players should beware of the existing downward risk.
The current foothold stands near $15, whereas $20 acts as the initial resistance. Price declines beneath $15 would indicate a sell sign, opening the gates to $13. Meanwhile, upticks past $20 would reveal $25 as the next target.
