Plug Power (PLUG -2.34%) stock absolutely crushed the market this week, surging a massive 42% at its highest point in trading through noon ET Friday, according to data provided by S&P Global Market Intelligence. Investors in Plug Power are accustomed to wild price swings, but they found several reasons to bet on the languishing hydrogen stock this week.
One analyst believes Plug Power stock could double
Plug Power stock surged more than 30% last week as well, after the company said it had negotiated a loan of $1.6 billion with the Department of Energy (DOE). That’s a huge amount, given that barely months ago, Plug Power said it didn’t have enough cash to run operations for even 12 months.
Since funding of this size could solve many of Plug Power’s problems, it reignited investors’ faith in the beaten-down stock. Their hopes were lifted even higher when Plug Power announced the start of operations at its green hydrogen plant in Georgia, which could cut down the company’s costs considerably in the future.
This week, Plug Power shipped its first trailer of liquid hydrogen from its Georgia plant to its customers, including Amazon, Walmart, and Home Depot. So far, Plug Power has been buying hydrogen from the market to supply to its customers, but the start of its Georgia plant now means the company should be able to produce its hydrogen in-house and therefore save money.
Roth MKM analyst Craig Irwin even doubled Plug Power stock’s price target to $9 per share from $4.50 a share this week after visiting the Georgia plant, according to The Fly. After the visit, the analyst is confident that the “facility is ramping up smoothly, and all major technical issues are handled,” addressing prior concerns about Plug Power’s backlog and margins.
Could this be the biggest catalyst for Plug Power stock?
In an interview with Barron’s this week, Plug Power CEO Andy Marsh said that while the company could face difficulties in the near months, its gross margins should improve from the third quarter of this year onwards, when three hydrogen plants are up and running.
More importantly, Marsh hinted that Plug Power may not have to issue stock in the near term to raise funds and could opt for other options like debt. That means the company could survive without diluting the wealth of existing shareholders, and that could lift Plug Power’s stock price higher.
Where things stand now, a loan from the DOE could be the biggest catalyst for Plug Power stock in the near months, but investors should know that it could still take several months for the company to secure the loan. In between, Plug Power could continue to struggle to raise money to keep its operations and plants running.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Home Depot, and Walmart. The Motley Fool has a disclosure policy.