Why Plug Power Stock Plunged in April and Could Fall Further
By Neha Chamaria – May 8, 2023 at 1:57PM
Key Points
Plug Power missed its 2022 revenue guidance big time.
The market is worried that the hydrogen stock may now fall short of its 2023 goals.
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NASDAQ: PLUG
Plug Power
Plug Power Stock Quote
Market Cap
$6B
Today's Change
(%)
Current Price
$9.29
Price as of May 8, 2023, 4:00 p.m. ET
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Investors aren't sure what to expect from Plug Power's Q1 upcoming earnings announcement on May 9.
What happened
Shares of Plug Power (PLUG) plunged 23% in April, according to data provided by S&P Global Market Intelligence.
The hydrogen stock has been in free fall ever since it announced its fourth-quarter numbers in March. It didn't help that several analysts slashed their ratings and price targets on Plug Power shares last month ahead of the company's first-quarter earnings slated, for release on May 9.
So what
Plug Power's lofty outlook for 2022 kept investors on the hook -- the hydrogen fuel cell specialist expected its revenue to jump by almost 80% in the year.
Management dialed down expectations in early 2023, but Plug Power eventually fell short of even the revised guidance: In March, it reported only 40% revenue growth and a negative gross margin of 28% for 2022. High costs and hurdles during new launches and the construction of new plants were just some of the factors that management blamed for the poor margins.
NASDAQ: PLUG
Plug Power
Today's Change
(%) US$ 0,00
Current Price
US$ 9,29
PLUG
Key Data Points
Market Cap
$6B
Day's Range
US$ 9,05 - US$ 9,50
52wk Range
US$ 8,37 - US$ 31,56
Volume
16,994,017
Avg Vol
20,474,949
Gross Margin
-23.89%
Dividend Yield
N/A
With Plug Power's execution leaving a lot to be desired, analysts rushed in to cut their price targets on the stock. Here are some of the notable downgrades that Plug Power stock received in April, according to The Fly:
Morgan Stanley analyst Andrew Percoco slashed the price target to $15 a share from $35 per share, citing execution issues, low margins, and cash burn.
Piper Sandler analyst Kashy Harrison cut the stock's price target to $12 per share from $17 per share ahead of earnings.
UBS analyst Manav Gupta reduced Plug Power's price target to $24 from $26, stating that the company is a "show me" story and needs to prove that it can achieve its growth targets and boost margins.
Analysts at JPMorgan and KeyBanc also downgraded their ratings on Plug Power stock ahead of Q1 earnings, given the headwinds and the company's execution, among other factors.
Now what
Plug Power stock has now tumbled a whopping 42% in just the past three months, as of this writing. Sure, Plug Power's top line is still growing at a torrid pace, but investors expect better from a growth stock than delivering half the revenue growth it targeted.
Not surprisingly, the markets aren't taking a chance, remaining on the sidelines ahead of Plug Power's Q1 numbers. Will the company stick with its guidance of $1.4 billion in revenue and a gross margin of 10% in 2023 and even bigger goals through 2023? That's the biggest question investors will seek an answer for tomorrow. If Plug Power fails to deliver again or even hints at a possible guidance downgrade in the coming months, Plug Power stock could continue its free fall.