Wednesday, June 18, 2014 12:18:57 PM
PLUG...Plug Power: A Short Squeeze In The Making?
This is sounding good...Game starts mid-August...
One of our speculation stocks...tight...tight range and $4...$.62...
Interesting...
http://seekingalpha.com/article/2271103-plug-power-a-short-squeeze-in-the-making
Shares of Plug Power have been treading water in the past month as the absence of new catalysts keeps the trading volume low.
The next catalyst, and a very important one, is the Q2 report, where the company is expected to finally post strong revenue growth.
Declining volume and high short interest could cause a massive short squeeze.\
Plug Power's Q2 report is the most important near-term catalyst
I am sure that most investors are eager to see Plug Power's Q2 report, as it is expected to show a large year-over-year revenue gain. Analysts expect Q2 revenue to grow 126% to $16.95 million, a first quarter of triple-digit revenue growth since 2011. FY 2014 guidance and backlog updates will also be very important, as they will show if the growth can be sustained going forward, which is very important given Plug Power's current valuation. The company should continue to deliver triple digit revenue growth in the next several quarters, as the growth of its business ramps up. The company also expects to announce a major deal at the end of Q3, which may also be important for future growth expectations, as there might be additional upside for revenue growth expectations. The Q2 report is also very important because the company has a long history of guiding high and delivering below expectations, so the Q2 report may finally show that the management's practices have turned a corner. Based on all of this, I expect that the Q2 report will be the most important catalyst for the stock this year. Of course, if the company fails to deliver, the catalyst will be negative for the share price.
Conclusion
The lack of catalysts in the last few weeks has resulted in declining trading volume and lower volatility. This will likely remain the case in the next two months, unless the company has an important announcement in the meantime.
Plug Power: Can a Story Stock Succeed?
By Jay Yao June 18, 2014
...from Motley Fool
Ever since man first spoke, man has told stories. Most stories are doomed to be forgotten. Every once in a while, however, man tells a story that captures the imagination.
Because of storytelling's power, it comes as no surprise that stories are told in the stock market. Stories have, in fact, always been a part of the stock market. Before Pets.com, there was the South Sea Bubble and Dutch Tulips. Before Tesla Motors (NASDAQ: TSLA ) , there was Amazon.com.
Stock market stories take off because they occasionally make the storyteller and early participants a fortune. They grow because the twin traits of human greed and herd behavior combine with optimistic sentiment to produce a dynamic that other participants can buy into. Story stocks, as a rule, are companies with vast end markets, great growth rates, and endless hype. They generally rally the most in the growth acceleration stage, where it is plausible to assign any growth duration and enough market participants will believe it. The bull market then carries the stocks up higher until the last incremental buyer buys.
Today's story
Among the many story stocks today is Plug Power, Inc (NASDAQ: PLUG ) . Given Plug Power's recent roller-coaster history, many investors wonder whether Plug Power will succeed.
Over the past year, Plug Power has indeed succeeded -- the company has grabbed significant market share and shown remarkable growth. This achievement by itself is not impressive, however, because anyone can capture market share in a sector that bleeds money. It is the fuel cell forklift sector's negative margins that deterred other companies from entering the market in the first place, allowing Plug Power to win contracts from Wal-Mart and FedEx.
What would be impressive would be for Plug Power to keep and profitably monetize that market share. This is generally what investors call execution. Most investors assume that a company needs a hard moat such as patents or brand equity to succeed in that aspect, but as Tesla Motors and Amazon have shown, sometimes having great management that is one step ahead of the competition is enough. If management builds enough economies of scale, Plug Power can compete against Toyota or other potential entrants if and when they enter.
With a short float of 22%, the market's current opinion is that management will not execute. This makes sense because the management has not executed before -- Plug Power's leadership team has over-promised and under-delivered for years. As a consequence, Plug Power has been in the red for over a decade and has lost close to $850 million since inception.
That being said, past performance does not predict future returns. Having raised $124.3 million, Plug Power no longer depends on the market for survival capital. The company's chance of success is also better than it was in the past because the fuel cell forklift market is much larger than before.
Bottom line
Even though it is improbable that Plug Power will succeed, nothing is impossible. Some story stocks have a happy ending. The difference between the ones that do -- such as Tesla Motors -- and the ones that don't is execution. As long as management executes and monetizes its market share, Plug Power can grow into its valuation. Whether that happens is something that investors will find out in the coming quarters.
Execution will also decide whether the Plug Power story has a surprise ending or not.
Jay Yao has no position in any stocks mentioned. The Motley Fool recommends Tesla Motors. The Motley Fool owns shares of Tesla Motors.
This is sounding good...Game starts mid-August...
One of our speculation stocks...tight...tight range and $4...$.62...
Interesting...
http://seekingalpha.com/article/2271103-plug-power-a-short-squeeze-in-the-making
Shares of Plug Power have been treading water in the past month as the absence of new catalysts keeps the trading volume low.
The next catalyst, and a very important one, is the Q2 report, where the company is expected to finally post strong revenue growth.
Declining volume and high short interest could cause a massive short squeeze.\
Plug Power's Q2 report is the most important near-term catalyst
I am sure that most investors are eager to see Plug Power's Q2 report, as it is expected to show a large year-over-year revenue gain. Analysts expect Q2 revenue to grow 126% to $16.95 million, a first quarter of triple-digit revenue growth since 2011. FY 2014 guidance and backlog updates will also be very important, as they will show if the growth can be sustained going forward, which is very important given Plug Power's current valuation. The company should continue to deliver triple digit revenue growth in the next several quarters, as the growth of its business ramps up. The company also expects to announce a major deal at the end of Q3, which may also be important for future growth expectations, as there might be additional upside for revenue growth expectations. The Q2 report is also very important because the company has a long history of guiding high and delivering below expectations, so the Q2 report may finally show that the management's practices have turned a corner. Based on all of this, I expect that the Q2 report will be the most important catalyst for the stock this year. Of course, if the company fails to deliver, the catalyst will be negative for the share price.
Conclusion
The lack of catalysts in the last few weeks has resulted in declining trading volume and lower volatility. This will likely remain the case in the next two months, unless the company has an important announcement in the meantime.
Plug Power: Can a Story Stock Succeed?
By Jay Yao June 18, 2014
...from Motley Fool
Ever since man first spoke, man has told stories. Most stories are doomed to be forgotten. Every once in a while, however, man tells a story that captures the imagination.
Because of storytelling's power, it comes as no surprise that stories are told in the stock market. Stories have, in fact, always been a part of the stock market. Before Pets.com, there was the South Sea Bubble and Dutch Tulips. Before Tesla Motors (NASDAQ: TSLA ) , there was Amazon.com.
Stock market stories take off because they occasionally make the storyteller and early participants a fortune. They grow because the twin traits of human greed and herd behavior combine with optimistic sentiment to produce a dynamic that other participants can buy into. Story stocks, as a rule, are companies with vast end markets, great growth rates, and endless hype. They generally rally the most in the growth acceleration stage, where it is plausible to assign any growth duration and enough market participants will believe it. The bull market then carries the stocks up higher until the last incremental buyer buys.
Today's story
Among the many story stocks today is Plug Power, Inc (NASDAQ: PLUG ) . Given Plug Power's recent roller-coaster history, many investors wonder whether Plug Power will succeed.
Over the past year, Plug Power has indeed succeeded -- the company has grabbed significant market share and shown remarkable growth. This achievement by itself is not impressive, however, because anyone can capture market share in a sector that bleeds money. It is the fuel cell forklift sector's negative margins that deterred other companies from entering the market in the first place, allowing Plug Power to win contracts from Wal-Mart and FedEx.
What would be impressive would be for Plug Power to keep and profitably monetize that market share. This is generally what investors call execution. Most investors assume that a company needs a hard moat such as patents or brand equity to succeed in that aspect, but as Tesla Motors and Amazon have shown, sometimes having great management that is one step ahead of the competition is enough. If management builds enough economies of scale, Plug Power can compete against Toyota or other potential entrants if and when they enter.
With a short float of 22%, the market's current opinion is that management will not execute. This makes sense because the management has not executed before -- Plug Power's leadership team has over-promised and under-delivered for years. As a consequence, Plug Power has been in the red for over a decade and has lost close to $850 million since inception.
That being said, past performance does not predict future returns. Having raised $124.3 million, Plug Power no longer depends on the market for survival capital. The company's chance of success is also better than it was in the past because the fuel cell forklift market is much larger than before.
Bottom line
Even though it is improbable that Plug Power will succeed, nothing is impossible. Some story stocks have a happy ending. The difference between the ones that do -- such as Tesla Motors -- and the ones that don't is execution. As long as management executes and monetizes its market share, Plug Power can grow into its valuation. Whether that happens is something that investors will find out in the coming quarters.
Execution will also decide whether the Plug Power story has a surprise ending or not.
Jay Yao has no position in any stocks mentioned. The Motley Fool recommends Tesla Motors. The Motley Fool owns shares of Tesla Motors.
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