Plug Power Is Up 34% in July, but Short Sellers Are Attacking

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Key Points

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While the world continues to suffer through 12 consecutive months of record heat, green energy solutions are being sought out at a breakneck pace. But while electric vehicles garner most of the media's and investors' attention, another alternative energy solution for transportation is being explored: hydrogen fuel cell systems — carbon neutral technologies that focus on the use of hydrogen for a range of applications.

That is precisely what Plug Power Inc. ( NASDAQ: PLUG ) has focused its resources on, and initially, it was something that was propelling its stock to incredibly heights. The company, founded in 1999, saw its stock climb to an astronomical $1,497.50 per share by March 10, 2000.

But it has all been downhill since then, with shares plummeting 99.79% since, and the recent jump in its shares likely set off alarm bells for Wall Street's short sellers, who are familiar with the $2.27 billion market cap company's struggles over the past two decades.

Longevity Is Not a Metric of Success

Currently, of Plug Power's 742.56 million shares outstanding, 205.179 million are being shorted, according to Nasdaq.com, with 6.6 days to cover per the website's last updated settlement date of June 28. That is 27.63% of the company's total shares outstanding.

And while $996 million worth of shares are currently being held by institutional investors like Vanguard and its 54.986 million shares, and Blackrock ( NYSE: BLK ) and its 48.204 million shares, institutional ownership has decreased to 40.16% over the past year. Blackrock has sold 3.098 million shares in 2024, and Morgan Stanley ( NYSE: MS ) has offloaded 4.745 million shares this year.

When the company next reports earnings, the consensus earnings per share (EPS) forecast for the second quarter of 2024 is -33 cents. That would follow a pattern of negative EPS that has stretched for years and was punctuated by a fourth quarter 2023 EPS of -$1.08 compared to the forecast -37 cents.

Plug Power's total revenue for the trailing 12 months is $757.42 million, but operating income is -$1.36 billion, which is good for -$1.18 billion in free cash flow. Bleeding money like that will attract predatory short sellers from all corners of the Earth. Compounding the bad news is the Wall Street Journal's one-year median price target for PLUG of $3.75. At the time of writing, shares are trading or $3.06.

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